In our last post, we announced the acquisition of a contract manufacturer in Xiamen, China to expand our global competitiveness and our capabilities. It has been an exciting few months and we want to continue to educate our community on the benefits of our expansion and answer your questions.
First, we have talked to our customers and they desire a different product delivery mechanism. They want to place blanket orders, have Segue institute kanbans and a distribution center in the United States, and thus receive a seamless supply of product and a significant improvement in delivery times. We recognize that this is essential to our success in the future and we are working to put this in place and improve our customers’ position as well as Segue’s position here in the States.
Next, through Segue Xiamen we will be able to competitively source products and components to be used in products built in both Xiamen and our U.S. locations. Our local position in Xiamen can help us do a better job meeting the needs and cost requirements of all of our customers.
Now, to answer your questions:
FAQs on doing business with Segue Xiamen
1. How can I expect my deliveries to shift now that Segue has a facility in China?
Whether your product is manufactured in Lowell, MA or Xiamen, China, lead times should remain the same and the transition should be seamless. If blanket order are placed, deliveries will be scheduled per your requirements and if necessary, we will consider Kanban programs to support your demand.
2. How do you decide when and if my product moves to Segue Xiamen?
High volume, low mix, high labor content assemblies are most likely to move to Xiamen to realize the cost benefits of offshore manufacturing. In addition, products that have components that can be localized, will also be considered.
3. Will I see a cost reduction?
If you have manufacturing requirements with high labor content or if you are willing to localize suppliers for components, you should be able to realize a cost savings.
4. How can I benefit this year with the new acquisition?
Segue is now able to offer:
- new production capabilities including over-molded cable assemblies, printed circuit boards and injection molded parts;
- new sourcing capabilities for components and sub-assemblies, whether they are assembled in the U.S. or Xiamen;
- localization of components and low cost assembly.
5. How do you deal with such a long delivery cycle?
The plan is for our high-volume customers to place blanket orders and to implement Kanban release mechanisms with reorder points to create seamless deliveries. This will take some time to implement but it is Segue’s vision to implement this system within the year.
Please let us know your questions about offshore manufacturing and how it effects your cost and deliveries. We hope this will be a running post as we continue to provide answers to the most frequently asked questions.