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Lean TVs from Mexico?
November 7, 2007

Sharp takes a gamble on new TV plant in Mexico - USATODAY.com

Good article in the USA Today today. Sorry for the redundant redundancy there.

I'm reminded of an earlier post about Olevia building some TV's in the US. I'm also reminded of a comment that Jim Womack made in a podcast of mine (I think it was this one) where he asked the question, "What about Mexico?" Mexico has low wages AND close proximity to the U.S.

Sharp is starting to take advantage of that, not only doing assembly, but also doing the more intensive production of sheet glass that's used to make flat panel screens... in Mexico.

As the USA Today points out, since TV prices decline so quickly, the value drops while on the proverbial slow boat from China. By building in Mexico, they cut the lead time from 40 days to 7 days. That means more responsiveness to the market AND lower inventory. Not bad.

The downward pricing trend reminds me of the advantage Dell had when PC prices were dropping so quickly. Dell had such a tremendous supply chain advantage from buying components later than their competitors because of Dell's short response times to customers. Is Sharp poised to be the Dell of TV's? How ironic, since Dell went the traditional outsourcing route, farming out production of Dell-branded TV's to Asia, with the slow shipping times. Why didn't Dell learn from their PC success??

Is this a trend, will more companies be looking at Mexico as a "fast response" option from China? Does this work only in markets where products change quickly and/or prices fall rapidly?

Posted by Mark Graban on November 7, 2007 | Comments (0)