Injection Molding & Total Costs of Ownership by GreenLeaf Industries

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• published: 05 Oct 2016
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Many individuals loosely associated with the manufacturing world, have long been under the inaccurate assumption that offshoring always improves a company’s bottom line due to lower wages abroad. As a result, for too long, companies failed to adequately analyze the full costs involved with offshoring. These costs include not only the financial shipping and tariff costs, but also the less direct costs of removing money from the local and domestic economy. The Reshoring Trend The Reshoring Initiative is a non-profit group that analyzes offshoring costs and tracks statistics that detail trends in offshoring. According to the Reshoring Initiative, around 500,000 manufacturing jobs have returned to the United States over the last few years. A variety of factors have contributed to this trend. The Reshoring Initiatives cites rising wages in China and domestic developments of advanced manufacturing technologies as the primary causes of this trend. Government encouragement – The United States government has invested an increasing amount of effort into getting companies to relocate their production facilities back in the country. Companies can often enjoy tax breaks and other financial benefits if they reshore. These government incentives are offered on the federal, state, and local levels. How Do Total Cost Of Ownership Calculations Work? Companies that neglect TCO calculations when deciding if offshoring is worthwhile, can often be making a huge mistake. The decision and process of offshoring production is a time consuming and meaningful exercise that should not be taken lightly. Careful and comprehensive cost calculations can reveal if a manufacturer is about to enter into a time wasting offshoring initiative that might actually HURT their bottom line. With TCO, companies don’t just enjoy a simple and comprehensive means of examining the costs associated with offshoring. They all take advantage of tools that also factor in the future costs of offshoring and the costs of potential risks of offshoring. The expenses analyzed include, but are not limited to, travel expense, travel time, costs of shipping, warranty costs, IP losses, and effects offshoring has on innovation potentials related to product development. TCO calculations should also take into account any potential instability in politics, natural environment, or society of the country to which the company is considering offshoring. According to research conducted by organizations like the Reshoring Initiative, some companies will improve their bottom line by reshoring up to a quarter of what they currently have off shored. GreenLeaf Industries has helped multiple companies reduce TCO and cycle times by reshoring their plastic injection molding projects. How Can Companies Use The TCO Estimator Offered By The Reshoring Initiative? Perhaps the easiest way out there to make accurate and dependable TCO calculations is to use the Estimator tool offered by the Reshoring Initiative. TCO Total Cost of ownership GreenLeaf IndustriesThis tool looks into a total of 30 different cost factors in order to help companies come to an accurate conclusion regarding the viability of offshoring. The result of running the estimator is a collection of line charts that show both the current TCO calculation and a 5-year TCO forecast that predicts offshoring results out into the future. The TCO calculator will break costs down by category so that companies can see what specifically is making offshoring the most costly. One of the best things about the TCO Estimator is that it is free to use and can be easily accessed online. The Estimator is promoted by recognition from the United States Commerce Department. It offers 17 different country specific analyses so that companies can curtail their results depending on which country they are interested in offshoring to. The Reshoring Initiative’s Estimator tool is an invaluable tool to any manufacturing company that needs some insights on the potential benefits and drawbacks of offshoring. If you would like to discuss one of your plastic injection molding projects, contact us for a free consult. GreenLeaf Industries is a premier supplier of custom, plastic injection molding parts. To discuss your project with a GreenLeaf expert, contact: GreenLeaf industries www.greenleaf.biz 310 Bussell Ferry Road Lenoir City, TN 37771 p (865) 988-5661