Over the past decade it’s become more popular, feasible, and profitable for 4x4 accessory manufacturers to send product designs overseas for fabrication, manufacturing, and production. With the increased span of the internet in countries like China, India, and the Philippines; smaller and more rural firms can compete at a global level in multiple industries.
While many industries have been using overseas manufacturers for several decades, this is something newer for the 4x4 accessories industry. Obviously there are some pros and cons for outsourcing on both the business owner and consumer side.
Economies of Scale – outsourcing of manufacturing for US firms becomes much more realistic, profitable, and easier as the quantity of products needed increases. For example, Apple, Inc. may sell 10 million iPhone 5 units in its first month after launch. At this level, it becomes much more profitable for them to use Foxconn of China where they can manufacture the mobile phone for nearly $8 (not including the bill of materials). This is the same for 4x4 accessory manufactures, the larger they are, the more profitable and realistic it becomes that they can outsource manufacturing.
Overhead Costs, etc. – The other large advantage that appeals to firms looking to outsource is the decrease in overhead needed from equipment, skilled labor, workforce, shop space, etc. This can also radically change their business model to focus on research, design, sales, and order fulfillment without the need for actual in house manufacturing and production. For example, Smittybilt outsources all products to be manufactured overseas and therefore can offer some of the lowest prices.
Quality – the single most common complaint about overseas parts within the 4x4 accessories industry is the association with poor quality. While this is not true for every company, it’s the perception from many consumers and truth with many others. This may be due to poor materials, poor quality control, or a host of other issues. The fact remains that the US leads in terms of high quality manufacturing within the industry.
Turnaround Time – the other large issue when dealing with an overseas manufacture is that the turnaround time can range from 30 – 120 days on average. A large part of this is due to shipping times as most companies generally choose to ‘slow boat’ a shipment through container ships due to the excessive weight. With larger companies like Walmart and others, you may never notice this as they’re experts in just in time inventory practices. However, with smaller 4x4 accessory manufacturers attempting this technique, you may experience frequent backorders due to lack of expertise in the process.
This is a short overview of some of the largest pros and cons to consider when either attempting to outsource your manufacturing or purchase from an outsourcing 4x4 accessory company. As a business owner, you must know your customer and consider if the quality will be comparable and accepted by your customers. As a consumer, you need to weigh the costs of choosing price over quality and processing times.