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The Secret to a Successful Transition into Mexico Manufacturing


Although China has historically been one of the top destinations for companies looking to lower their manufacturing cost, many companies now understand the benefits of having their manufacturing closer to home, in lower cost countries like Mexico. Transferring manufacturing to Mexico, however, can be a daunting project, as it requires companies to establish new facilities, supply chains and to negotiate the logistics of opening operations in a new area. Hiring a turnkey contract manufacturer can be an important step in easing this process.

Turnkey manufacturers in Mexico offer a full-service solution: they develop supply chain services, handle material acquisitions, inspect incoming materials for quality control, oversee assembly and quality control tests and are directly involved with price and quality negotiations with suppliers. One of the main advantages of working with a turnkey contractor is that it allows your company to not be troubled with the logistics of setting up a new operation in Mexico, freeing your organization to focus on its core competencies. So if a company is wondering whether it is feasible to move their manufacturing to Mexico using the same scenario as its operations in China can know that the answer is: it’s feasible.

There are two main steps to finding the right turnkey contract manufacturer to begin operations in Mexico. The first is to find the right manufacturer. The ideal organization has the necessary capabilities for making the new product, including experience in the industry, the right equipment, experienced labor force, quality programs in place and an established supplier base. The second step to initiating this transition is to sit down with the turnkey contract manufacturer and to look through all of your specifications to make sure that the turnkey organization is a good fit for you.

Ideally, in this meeting you can go through one product line and take a look at its entire bill of materials (BOM). The advantage of this sort of meeting is that it allows you and the turnkey group to go through the bill of material line by line and look at the costs of manufacturing in China versus the costs of manufacturing in Mexico. This will allow you to see what savings can be reaped by working with the Mexican manufacturer, especially when the costs of fuel and shipping are factored into the final cost estimate. This also allows the turnkey company to evaluate your business and compare its needs to its own established supplier base; if need be, the turnkey group can import supplies from Asian manufacturers until a North American base can be found or developed.

Finding an experienced turnkey contract manufacturer can be the difference between a protracted and stressful establishment of a manufacturing base in Mexico and a smooth and easy transition. The best organizations works closely with clients to set up and regulate the new operation (including supplier negotiations and quality control). This frees up your organization to focus on what you do best without having to negotiate unfamiliar territory. As a result, turnkey contract manufacturers can result in a significant cost reduction for clients and allow them to allocate more resources into product development without suffering a dropoff in product quality.

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