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Reduced costs help medical device manufacturers decide on Mexico

A picture of a stethoscope placed over many dollar bills symbolizing how the manufacturing of medical devices is quite expensive.
16 Jan 2015

Outsourcing has become a growing trend in the medical device manufacturing industry as companies are constantly on the lookout for ways to help lower costs, increase agility, reduce time-to-market and see a higher return on investment. That sentiment was reinforced in an article for MedCity News co-authored by David Blumberg and Vicki Phelan from KPMG. 

Manufacturers can go many different routes
While outsourcing initiatives are usually carried out with those same goals in mind, businesses can go about these strategies in a number of different ways. For example, firms can shift operations such as procurement, finance and accounting, real estate and facilities management and customer care to shelter companies in Mexico. Or they can cede control of their manufacturing, IT services, payroll processes, application development and finance and accounting to an offshore facilities. If U.S. companies take advantage of these firms south of the border, businesses can experience a more streamlined supply chain.

However, due to the vast cost savings related to nearshoring to Mexico, many medical device manufacturers are focusing on the first example and are keeping their operations in North America. With skilled workers close by in Mexico, a blog post for Design News talked about how going south of the border for outsourcing is something medical device manufacturers are doing more of.

"The dynamics of medical electronics manufacturing do not follow typical outsourcing trends," Lavanya Rammohan, research analyst, electronics manufacturing equipment at Frost & Sullivan, told Design News. "North America will continue remaining a strong manufacturing hub for high-end, complex, and high-reliability medical devices."

Mexico provides the best opportunity to save money
Trusting in shelter companies in Mexico gives medical device manufacturers the chance to see faster speed-to-market and better medical electronics labor expertise, as well as greater cost savings, which is the main reason why are keeping their operations local in North America is becoming more popular. Even if electronics manufacturing service providers can get products out in a more time-efficient manner, they don't offer the same offshoring benefits at shelter companies. Advantages such as a short supply chain, a closer proximity to providers and lower amounts of working capital can all lead to better cost savings, affording firms in the booming medical device manufacturing industry the opportunity to see even more growth.  

"Cost is and will continue to remain the key driver for any outsourcing including the medical industry," Rammohan told Design News.

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