The Benefits of Nearshoring Your Medical Device Manufacturing

For any manufacturer, finding ways to reduce costs and improve supply chain stability is imperative. Medical device manufacturers face added challenges in meeting tight regulatory compliance standards that are meant to ensure patient safety. While offshoring has long been an option for managing costs, it isn’t always the most expedient for supply chain reasons. This is where nearshoring can help.

What is nearshoring and why is it different from offshoring? More importantly, what are the benefits of nearshoring your manufacturing versus reshoring or offshoring? Here’s a quick explanation of what it means to nearshore your manufacturing and how it can benefit you:

What Is Nearshoring?

Nearshoring is the practice of taking your manufacturing of specific products—such as custom medical devices and their interconnect solutions—and moving them into a different country located close to your own country of operation.

This can be done by establishing your manufacturing facility in a foreign locale or by contracting with a specialist manufacturer who already operates in that country and has the appropriate licenses, permits, and facilities to take your products from design to completion in place.

Difference between Nearshoring and Offshoring

Nearshoring is often compared to offshoring. While the two terms are closely related, they do have a major distinction.

Offshoring typically refers to the movement of manufacturing capabilities to a far-away location—typically on a different continent. While this opens up a wide variety of options for finding cost-effective manufacturing services, it can distend the supply chain for your medical devices and custom medical device components severely and introduce heavy delays—especially if you use more economical shipping options such as seabound freight instead of air freight.

Benefits of Nearshoring Medical Device Manufacturing

Cost Reductions vs. Local Manufacturing

Reshoring manufacturing to the U.S. or expanding existing manufacturing facilities within the country can be cost-prohibitive. Between high real estate values, state and federal taxes, and the need to meet strict environmental and cleanroom standards, establishing new medical manufacturing space can cost hundreds of dollars per square foot—not to mention the ongoing costs of labor and other overhead costs.

Nearshoring is frequently less costly than going to extreme lengths to reshore manufacturing capacity to the USA—especially when partnering with a specialist that already has facilities in place to handle medical device manufacturing.

This can provide significant cost savings to your company without having a negative impact on your time-to-market.

Faster Shipping vs. Offshoring

Nearshoring offers faster (and often more cost-effective) shipping than offshoring manufacturing.

For example, according to Guided Imports, seabound shipping from Yantian Port in China to New York City Port in the U.S.A. takes about 33 days and costs about $3,600. Meanwhile, Yantian Port to Los Angeles Port (with truck-based shipping to NYC) takes about 25 days and costs $9,000. Air transport from Yantian to John F. Kennedy Airport only takes 3 days, but costs $55,000. These figures assume a normal traffic load for shipping at the port—holiday traffic may increase the delay.

Meanwhile, shipping from Costa Rica to the USA often takes less than a week—though shipping costs can vary depending on the shipment method. Several U.S. domestic shipping services cover shipments between Costa Rica and the U.S. (partly because of the close diplomatic relationship the two countries enjoy and the frequent tourism of American citizens to Costa Rica). This provides an opportunity for manufacturers to do comparison shopping for shipping times and costs to find the optimal solution for their needs.

Improved Supply Chain Stability and Faster Time to Market

By using already-established manufacturing capacity and reducing the time goods spend in shipping, nearshoring can help you improve your supply chain stability and your time-to-market for new medical devices.

Where offshoring can add over a month to your supply chain timeline, having a nearshored manufacturing facility available for device or component assembly and shipping can ensure that you get the devices and parts your downstream customers need when they need them.

For example, say that a client is operating in a state that experienced a major disaster like a hurricane. In the wake of this disaster, many of the client’s stored medical devices are damaged, their number of emergency cases rises, and they need new devices and interconnects as soon as possible. With offshored manufacturing, it would be nearly impossible to fulfill a time-sensitive order like this before the client finds a faster alternative to meet their immediate need.

However, with a nearshored manufacturing facility, production could be rushed on critical devices and components as needed and shipped rapidly. This could help you secure the business and ensure your supply lines are healthy.

Improved Collaboration with Your Manufacturing Partner

Never underestimate the challenges posed by time zone and language barriers. When working only with overseas manufacturers on different continents, the time difference alone can make it incredibly difficult to coordinate with them.

For example, China is 12 to 13 hours ahead of Washington D.C. So, if your offices are in the eastern part of the U.S., the “business hours” of your Chinese manufacturer would be from 9:00 pm to 5:00 am your time. This would, naturally, make setting up regular meetings extremely difficult unless you or your partner dedicates someone to coordinate things during an overnight shift.

Add to that the cultural barrier created when interacting with a company in a completely foreign locale with little regular contact with American businesses. Numerous idioms and behavioral expectations don’t translate cleanly across different cultures, which can lead to miscommunications of expectations and even basic product specifications.

Nearshoring production to a location with frequent interactions with American culture and a much smaller time zone difference can make coordinating and collaborating with your manufacturing partner much easier than it would be with a purely offshored approach.

Potential Expansion into New Markets

Both offshoring and nearshoring your medical device manufacturing can provide the benefit of expanding the markets your company can reach. With manufacturing in new countries, you can provide rapid shipping to medical research labs, hospitals, and other facilities in the area to extend your business’ client list and increase revenue.

Nearshore your Medical Device Manufacturing with ATL Technology

ATL Technology is a dedicated partner for medical device manufacturing and design that can help you iterate and move new devices to market. Our engineer-to-engineer approach means that we work alongside you and your team to create the perfect solution to meet your (and your customers’) needs.

With manufacturing facilities in the U.S., Costa Rica, China, and the UK, we are driven to inspire medical device possibilities. We can help you offshore, reshore, or nearshore your medical device and component manufacturing to best meet your manufacturing goals. Connect now to get started!