TJM For Low Cost Domestic Manufacturing

We have identified that our assembly line can compete with off-shore manufacturing costs under certain volumes and supply chain circumstances. An example of this is in a variety of Bluetooth modules and module integration into Bluetooth Low Energy products we currently produce. These are commercial modules used in a number of cost sensitive consumer applications. Logistics and communication being obvious are only part of the challenges, here are 3 other key considerations they shared.

Scheduling – With time to market being critical customers end user wants to place an order and have product delivered in 4-5 weeks. A typical window of time to start a low volume production build in China is 3-4 weeks out from the time you ship your parts over there. If you miss that scheduled start date for any reason, such as an incorrect part, a part is lost or a part that lags schedule, you get put to the back of the line and your start date can be another 3-4 weeks. An eight week lead time can easily turn into 12 weeks. *For this same customer TJM  typically starts their build in one week or less, and in the case of the Bluetooth products discussed here a 2500-5000pc lot is produced in one week (compared to 6-8 weeks off-shore).

Cash Flow –  Off-shore manufacturers want to be paid up front or at minimum expect a 50% deposit to start your job and 50% COD. This is even more apparent with 2500 to 5000 pc lots per year. It can take 2-3 years before off-shore manufacturers will consider taking a purchase order and starting to build your product without payment up front or without a significant deposit. Even then, you are still operating with COD terms at best. Based on any scheduling challenges presented above, cash can be tied up for 8-12 weeks (plus 30 more days if you grant your customer terms). It goes without saying that this is a very long term of investment for small technology companies and start ups.

Quality  – Being a stateside supplier, TJM will monitor and communicate in real-time, all in-process tests results in addition to our inspection yield and product verification data. Any drop in test yield or inspection failure trends and we stop the line, identify cause and address quickly. Too often OEM’s do not realize they have defective product in process overseas and unfortunately will not discover this until the entire lot is delivered back to them. One big batch movement of bad product! Keeping in mind you have paid for 100% of the parts and labor and your now sitting on a defective lot, you have no leverage with your off-shore CM for help in addressing the poor yield.  As an AS9100 compliant company we gauge real-time process metrics on every project, whether it’s a prototype build or a small volume consumer product build. While we aren’t required to provide the level of documentation on low cost commercial product contracts, we are still required to apply the AS9100 principles of material controls such as traceability, supplier performance, counterfeit mitigation, process effectiveness and quality metrics. The result is the consumer and commercial product OEM benefits from a system that has many safeguards to maintaining product functionality and integrity.

Summary – While we may not be as low as offshore manufactures on a cost per unit labor basis, we exceed in overall value proposition in how we excel at scheduling  “just in time” delivery, quality, mitigation of risk and the obvious logistics challenges. While off-shore manufacturing has its place (unfortunately for US manufacturers), there are still substantial opportunities beyond prototypes and pilot builds in cost sensitive, consumer and commercial product.

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