Competitors are always trying to bite into your market share. Every dollar you spend on plastic for your products has to yield the highest possible return. For many companies, manufacturing plastic overseas is the answer.
It makes sense to consider overseas production. In April 2016 - April 2017, 6.5 million tons of plastic products came from China. It stands to reason that with that much production, prices are more affordable.
Before you decide that overseas plastic manufacturing is for you, consider these 7 important things:
Environmental sustainability is a growing concern for many businesses. It doesn't matter if it stems from corporate values or is a response to regulations. Knowing how much energy is used when manufacturing plastic is important.
For decades, making plastic required a lot of energy. Today, research and innovation lead to ongoing improvements in the energy efficiency of making plastic products.
Try to use an overseas facility that uses current technologies. Get energy consumption specs to ensure they serve your corporate goals and requirements.
There is no standard way for manufacturers to present bids for your business. But if you specify what you want spelled out, you'll be able to compare bids with greater confidence.
The key financial aspects to have made clear in a bid are:
- Freight. If it's included, ask for details about carriers and any restrictions.
- Warehousing. If it's provided, get details on location and security.
- Currency exchange. If the rate isn't fixed, what it's based on needs to be clear.
- Customs. Clear delineation of responsibility for goods crossing borders can save time, money, and your reputation.
- Sundry costs. The goal is to have all costs -- including staff travel, insurance, and local fees and taxes -- out in the open.
Often, the greatest benefit of using overseas plastic manufacturing is lower operational costs.
Regulations and Tariffs
Before manufacturing plastics overseas, make sure you understand the regulations and tariffs that relate to your product.
You want to remain aware of changes in global and regional politics. These can create changes to regulations that affect operations and the availability of raw materials.
Sometimes enforcement of new regulations happens quickly. Ensure any manufacturing facility you select can adapt in kind.
Processes Used in Manufacturing Plastics
If you understand the basics of the most common kinds of plastic manufacturing processes, you can make better decisions about selecting an overseas supplier.
Here we give the simplest definition of several processes for manufacturing plastic.
Computer numerical control (CNC) machining starts with a solid block of plastic. A computer then removes sections of plastic until what's left is the desired form. This is a subtraction method.
The opposite of CNC machining, 3D printing is an additional method of manufacturing plastic parts. Based on a technical design, a computer layers ultra-thin lines of plastic until the desired form is built.
Casting is a common and cost-effective method for making simple products in low, medium, or high volume. Molten plastic is poured into a mold and left to cure and solidify.
For simple, somewhat flat products, thermoforming can be a suitable option. The process pulls thin sheets of plastic into a mold. This process uses less energy than casting.
Extrusion starts with small pellets of plastic which are melted and pushed through a die. The result is a continuous, uniform length of plastic that can be cut at specific points.
Semi-melted plastic is blown into a mold so that it sticks to the side of the mold. Blown plastic products are formed from the outside in.
The injection method is best suited for complex plastic products. Like extrusion, it uses small plastic pellets. The melted pellets are injected into complex molds.
Not all plastic manufacturers are equal when it comes to customer management. And, managing your end of the relationship can be time-consuming and expensive.
For example, keeping tabs on production standards and quality assurance takes one kind of expertise. Managing contract requirements and communication issues requires another kind.
Many business leaders choose to use a supply chain management service to ease this pain point. But if you opt to take care of it in-house, here are key topics to explore before signing a contract:
- Production method
- Security - physical (operation and products) and of intellectual property (designs, etc)
- Health & safety at facility
- Quality assurance
- Source of raw materials
A common issue when working with an overseas plastic manufacturer is communication. Differences in time zones, language skills, and cultures can create significant communication gaps. Comfort with video conferences and other kinds of remote communication can also differ.
Gaps in understanding can lead to expensive errors. Miscommunication can cause delays in product delivery, product flaws, regulatory fines, and negative public relations.
One way to mitigate the risk of remote communication is in-person meetings. Involve the right people and hold frequent meetings throughout the duration of the relationship. It's ideal to have at least one person on your team speak the language local to the manufacturer.
Encourage questions at any time. This simple act can improve understanding and build an appropriate level of trust.
Exchange rates can be a pivotal factor in the decision to go overseas for plastic parts and products. There's no way to guarantee currency valuation won't change. But you can manage the risk of currency exchange with awareness of historical trends and current economic circumstances.
Fixed per unit rates can also help. If an exchange rate is comfortable in the context of your business model, strive to lock it in for the duration of the manufacturing contract.
Even if the rate improves later on, the value of not worrying about rate fluctuation often offsets the cost difference.
The benefits to overseas plastic manufacturing are many. They include lower per-unit cost through lower operational costs and favorable exchange rates.
But you also need to understand the challenges before you can make a fact-based decision. You might need to add in-house expertise to overcome communication gaps. And researching the right kind of manufacturing for your product can take time.
At UGS, we provide businesses of all sizes and across sectors with reliable, full-service Manufacturing Solutions. We've been doing it for close to 40 years and plan to continue for at least another 40! Standing with our customers as their businesses grow, is part of the value we provide.
From simple to complex products, you can relax knowing your manufacturing requirements are handled by UGS. Contact us today to get started!