Electronics Production |
Unexpected costs involved in Outsourcing
Outsourcing production to low cost regions often means heavy unexpected costs for the companies, according to a survey targeted nearly 300 Western European companies.
The Industrial Committee is an organisation consisting of unions and companies based in Sweden. The Industrial Committee has recently carried out a survey regarding the issues of transferring production out of Western Europe to low cost regions. The survey targeted 277 Industrial European companies.
According to the survey, most companies were surprised by the heavy costs involved by outsourcing the production to low-cost regions.
"Most companies have a general opinion that the industry would work like Dell Computers. You produce the parts on different locations around the globe, and assembling them in your own factory", Lars Bengtsson, representative for the Industrial Committee said. Lars Bengtsson means that the reality is more complicated than that.
Three unexpected costs that are usual are the logistic, increasing lead times, and project costs. To organise an outsourcing project is also a heavy expense in most cases. Many of the companies in the survey conclude that it would have been more cost effective to keep the production in-house. But only a few of these companies chose to move back to Western Europe.
