Cost vs. quality

The Invitrogen MAGic Sample Processor is the first of its kind in the industry. The processor is capable of running anywhere between one to 12 DNA protocols at once. Previously, all other processors have only been able to run one protocol at a time. Therefore, use of the Invitrogen MAGic Sample Processor can reduce processing time by an entire day.For many years now, the outsourcing of American manufacturing overseas has been common practice. Asia leads the way in producing most consumer goods – from electronics to housewares and everything in between – at far lower cost than would be possible in the United States. While this has resulted in a painful transition period for countless American workers, most U.S. companies have embraced the ability to produce their products at significantly reduced tooling, parts, and labor costs.

Yet, while American firms gave up manufacturing and production to overseas vendors, it has always been assumed that we would remain headquarters for the brains of the operation – the research, strategy, concept development, engineering, etc. Unfortunately, we are seeing the beginning of a new phase of outsourcing, one that could transform the playing field all over again. Having already gained the lion’s share of manufacturing work, countries like China and India are now focusing on building their capabilities in the innovation and design phases of product development. While some may dismiss the seriousness of this trend, we would be naïve to believe that America has a monopoly on a creative workforce.

In fact, the hard numbers tell a very different story. A handful of years ago Business Week reported China as having more than 400 design schools with an estimated 10,000 graduates every year. The Chinese government realizes that their position as low cost supplier of cheap labor will not last forever, and their population is already demanding higher wages and better living conditions. As a result, manufacturers are looking to places like Vietnam for even less expensive production solutions.

With that in mind, China is consciously investing in educating their workforce with the skills needed to add greater value to the product development process, to contribute at a higher rung on the food chain of international trade. In addition, those who dismiss the quality of thinking and design coming from newly minted Chinese and Indian professionals are enabling themselves to be short sighted; we only need to think back to the days when Japanese goods were scoffed at as low quality and derivative.

Of course, there are many risks to simply chasing low prices for any service, and that is all the more so when considering the use of off-shore resources for research, innovation, and design – the creative foundations upon which a successful product, line, or brand is built. These overseas resources lack not only the experience of Western firms in this area, but the culture of their markets also presents a significant challenge to their taking on a greater role at the front end of the product development process.

In China, for example, there is a strong tendency for individuals to refrain from pushing boundaries far beyond those accepted by the larger group, and a desire to reach some level of consensus before acting on new ideas.

This is changing to be sure, but in many cases, product development strategies overseas have culturally and economically favored a produce more and we will see what sticks approach, that is diametrically opposed to the kind of deep research, thinking, and planning engaged in, and by, the most successful Western firms. In the United States and Europe, focus is on taking the time to effectively target needs and opportunities in the market, ensuring that new products will be met with open arms and driven demand.

In contrast, the experience of overseas suppliers is on bringing imperfect products to market quickly, knowing that addressing the deficiencies will happen – inexpensively – in the next version.

There is also the well-established concern many firms have for the protection of their intellectual property when outsourcing to certain overseas markets. While IP rights are regularly ignored in both China and India, the risk to losing control over your most valuable intangible property – the critical ideas which form the foundation of your products’ success – can be of even greater magnitude (and more difficult to control) than problems related to the theft of technical or engineering-focused properties.

To the extent that low cost overseas design and development services have begun to gain traction, it has often been an indicator of their cost-effectiveness rather than the quality of design and innovation they deliver.

For many clients, solutions that are good enough suffice, and this is particularly true for lower cost products where investment in more expensive domestic design and development is difficult to amortize over their increasingly short shelf life. In addition, while investment in extensive front-end research, strategy, prototyping, and testing can readily pay off for brands with the equity to sell their products at higher margins over lesser competition, the business model for such investment can look decidedly different for products competing primarily on price point or in generic product categories.

As tempting as some may find the lure of overseas creative services, I would advise proceeding with caution. As a creative professional, I am concerned about the potential for the United States to give up yet another area of competitive advantage, which, as a nation, is so critical to our economic well being. American design and development firms have a genuine understanding of how to gain insight into the needs of users and the opportunities unmet in the marketplace, and there is much to be said for the proven methodologies of research and design strategy practiced by creative professionals here.

Moreover, thinking is not a precision skill like injection mold tool making, or analogous in the least to tedious assembly operations accomplished by inexpensive, unskilled labor. We have seen examples of clients trying out the creative services offered overseas, only to return in frustration to U.S. firms after realizing that promised cost savings were illusive at best.

While cost will always be an issue for manufacturers, the efficient investment of capital is also a key consideration in the product development cycle. There is no more important aspect of product development than coming up with the right idea or the optimal design… that is the foundation for everything to follow.

It is tough to argue with overseas production these days, but innovative thinking is not a place where any firm can afford to cut corners.


Product Development Technologies Inc.
Lake Zurich, IL
pdt.com