Business Xpansion Journal 2014: Mexico Cost Model Analysis for Manufacturing Success

As published in Business Xpansion Journal.

In a newly released whitepaper, Entrada Group provides manufacturers in the process of selecting new locations for their operations with best practices for ensuring they have a full picture of costs before they engage.

A cost model analysis gives manufacturers an overview of expenditures as they contemplate a new manufacturing location. Unfortunately, many companies in the early phases of site selection (particularly those evaluating locations in a foreign country) either lack insight into all the costs they will encounter in an unfamiliar location or fail to execute a sufficiently comprehensive cost analysis. This can lead to hidden expenses that will only be identified further down the road, eating into the very cost savings companies are trying to attain.

“One of the first things executives ask us, when their company is looking at Mexico, is ‘How much will everything cost?’” says Doug Donahue, vice president of business development with Entrada Group, a U.S.-based company that helps manufacturers transition to Mexico swiftly and cost-effectively. “That’s why the first step begins with a cost model analysis, because many manufacturers don’t have a complete awareness of the range of expenses they will incur with a transition to the region. We hope this whitepaper will be helpful to companies that are considering Mexico but are uncertain about where to start.”

Only by gaining an understanding of costs in Mexico can manufacturers position themselves to take advantage of the benefits of Mexican manufacturing, including average labor costs lower than those in China, growth potential due to Mexico’s 44 free trade agreements, proximity to U.S. and Canadian markets and exceptional transport infrastructure connecting Mexico to the rest of the world.

Topics covered in the whitepaper include:

  • Benefits of a Cost Model: Why it’s essential to perform a cost model — and the risks companies incur if they don’t do it thoroughly
  • Cost Planning: An overview of elements included in a cost model and insight into the types of costs manufacturers should plan for
  • Average Total Operating Cost: Insight into true costs in Mexico
  • Tailored Analysis: The importance of customizing each cost model
  • The Cost Advantages of Mexico: A review of the factors that make Mexico cost-advantageous compared to other global manufacturing locations

Source: Business Xpansion Journal

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