An LCR outsourcing option for low-volume, high-mix, high-complexity OEMs

The availability of low-cost offshore EMS sourcing alternatives, predominately in China, has hastened the exit of high-volume manufacturing from the United States. Left in its wake are lower-volume products, such as medical devices, industrial equipment, and aerospace/defense products, that are typically characterized by highly volatile demand, custom configurations, intellectual property constraints, and stringent quality requirements.

With increasing global competition and continued economic uncertainty applying pressure to margins, original equipment manufacturers are aggressively seeking ways to lower costs while protecting their ability to respond effectively to customer demands.

This management brief reviews how manufacturing strategies formulated totally in low-cost regions are ineffective for low-volume, high-mix (LVHM) products. It explores how successfully driving down costs while insuring the flexibility to respond to market demands requires a new two-pronged approach: the combination of low-cost, same-hemisphere labor with the agility, responsiveness, and control associated with a domestic presence.