The Rise of Mexico as a Global Leader in Contract Manufacturing

Today, Mexico is a global leader in contract manufacturing due to its industrious and skilled labor force, well-developed infrastructure, and lower labor costs. These factors, in particular, have made it an ideal location for companies to produce many products on a large scale.

contract manufacturing

First, its low labor costs and skilled workforce in everything from producing medical devices to parts for the automotive industry make it an attractive location for companies that want to reduce their operational costs while maintaining high-quality control.

Second, Mexico’s favorable regulatory environment allows foreign companies to operate with little fear of government interference or red tape.

In short, Mexico’s journey to becoming a global contract manufacturing leader is a testament to its ability to adapt and maintain competitiveness in today’s global economy.

In this blog, we’ll discuss the growth of Mexico’s manufacturing sector and how it became the leading choice for global business manufacturing operations.

Advantages: Why Are Global Companies Manufacturing in Mexico?

Global companies are manufacturing in Mexico for a variety of reasons. First, the labor cost is very low in Mexico, making it an attractive location for manufacturing and secure enough for foreign direct investment.

The country’s reliable supply chain and skilled labor force make it an ideal place to produce products from the automotive to the electronics industry.

The History of Mexico Manufacturing

A few significant factors in the development of Mexico as a leader in manufacturing include favorable free trade agreements and a more reliable global supply chain, all while keeping operating costs low.

Mexico also has abundant raw materials, such as mineral deposits, oil, and fuel, making it an ideal factory location.

Favorable Government Policy

contract manufacturing

Implementing favorable government policies has proven to be extremely influential in the growth of the Mexican manufacturing sector. These have included policies related to tax breaks, tariffs on imported goods, and subsidies for domestic manufacturers that help to encourage companies to set up shop in the Mexican economy.

Additionally, government policies can influence the types of products manufactured in a region. For example, some countries may prioritize specific industries over others (e.g., electronics vs. food products). This may influence which technologies are developed and used in factories.

Global trends have also played a significant role in shaping manufacturing in Mexico. Rapid economic growth and technological advancements have led to increased demand for consumer goods and processed products. This has driven the growth of many industries, including chemical manufacturing, metal processing, and textile production.

In short, manufacturing in Mexico has evolved through several factors, including natural resources and labor availability, as well as government policies and global trends.

Manufacturing with Shelter Services

Manufacturing with shelter services is a process in which products and services are created under controlled and safe conditions. This process can produce various products, such as food, clothing, building materials, and medical supplies. Manufacturing with shelter services can also be used to produce fuels, chemicals, and other materials that are essential for everyday life.

With the rise of advanced technologies, manufacturing through a shelter company has become more efficient and cost-effective, allowing companies to produce high-quality products at affordable prices.

Because many manufacturing processes require skilled workers with specific skills and knowledge, manufacturing with a shelter company has the added benefit of helping to drive the local economy by providing jobs for people looking to advance their careers.

Contract Manufacturing in Mexico

contract manufacturing

Mexico’s manufacturing industry is known for its high-quality products and efficient production methods. One of the main factors contributing to Mexico’s success in the manufacturing sector is its strong network of contract manufacturing companies.

These companies provide a platform for businesses of all sizes to outsource certain manufacturing tasks, such as tooling, testing, and packaging, all while retaining control over the final product. This allows businesses to scale their operations efficiently while maintaining control over their products’ quality.

Manufacturing in Mexico vs. China

Both Mexico and China have extensive manufacturing sectors that produce goods on a large scale and in both countries, manufacturing is an important source of employment and economic output.

However, there are also some key differences between the two nations. One major difference is that Mexico already had a more established industrial infrastructure than China did during its industrialization, including well-developed transportation networks, skilled labor pools, and advanced manufacturing technologies. By contrast, China had to develop these capabilities from scratch, making it a long road to high manufacturing productivity and efficiency levels.

Another key difference is the political environment in each country. In Mexico, the government plays a more active role in supporting the manufacturing and promoting industrial development. The government in China, on the other hand, has tended to focus on economic growth and market-oriented policies, resulting in less consistent support for manufacturing initiatives.

Overall, while both countries have developed their manufacturing sectors successfully, some key differences between Mexico and China may influence the trajectory of their respective industries.

Proximity to the US

An essential factor contributing to Mexico’s success in the manufacturing sector is its centrally located position between North America and South America. Working with a foreign company that’s not so far from home allows for quick delivery and distribution of goods across multiple markets.

Its close proximity to other major economies in the region also makes it easy for companies to source components and materials from other countries, further reducing costs and increasing efficiency in their supply chains.

BF&S Contract Manufacturers

contract manufacturing

BF&S Mexican contract manufacturing delivers unparalleled attention to detail and delivery from concept to completion. With BF&S’ full shelter services, clients can control their quality and production. Clients benefit from the experience of the BF&S staff, as well as their knowledge of the local market, eliminating the need to make sizable investments in physical and human assets.

BF&S customers can initiate operations quickly without establishing a legal presence in Mexico. BF&S “shelters” our customers from many risks and liabilities.

BF&S performs these tasks and functions that are not core to the manufacturing process, allowing our clients to focus on those areas that affect their profitability and growth.

Learn more by continuing to explore our website.

Industrial Manufacturing

industrial manufacturing

The industrial manufacturing industry is responsible for fabricating products used in large-scale manufacturing processes. Since the advancements of the industrial revolution, industrial manufacturing facilities have made mass manufacturing possible.

New technologies in industrial manufacturing are responsible for producing various products from raw materials, including everything from huge industrial machine tools to simple household items.

Capabilities of the Manufacturing Sector

Converting raw materials into useful machines, tools, and products is a cornerstone of the economy. Without it, no mass-produced object would be readily available to the masses. Supply chains would grind to a halt, many business models would cease to exist, and life as we know it would be impossible.

However, business and production opportunities still abound, thanks to the manufacturing sector. Industrial manufacturing, in particular, often refers to the manufacturing of manufacturing machines. Rather than manufacturing a product to buy in stores, industrial manufacturing deals with creating machines to manufacture the goods.

Manufacturing Industrial Equipment

Industrial equipment supports the manufacturing of goods for sale by a company.

Examples of industrial manufacturing equipment include:

  • Machinery
  • Tools
  • Materials
  • Personnel equipment
  • Factories or plants

Industrial Manufacturing Companies: Offshore vs Nearshore

off shore manufacturing

You may be familiar with the idea of “offshore manufacturing”, where in companies save money by manufacturing goods outside of the country where labor and material costs may be cheaper. Many developed countries are used to importing goods from China, for example.

However, recent supply chain issues, rising shipping costs, and concerns around intellectual property security have left many US companies searching for an alternative. Enter: nearshore manufacturing.

Nearshore manufacturing is when a business expands manufacturing to a nearby country, usually sharing a border with the business’s home country. This allows for better communication through shared language and similar time zones, lower shipping costs, more beneficial trade agreements, and greater security around intellectual property, all while still enjoying a lower manufacturing cost.

BF&S Contract Manufacturers for the Industrial Manufacturing Industry

BF&S Mexican contract manufacturing delivers on unparalleled attention to detail and delivery from concept to completion. With BF&S’ full shelter services, clients have full control of their quality and production. Clients benefit from the experience of the BF&S staff, as well as their knowledge of the local market; eliminating the need to make sizable investments in physical and human assets.

BF&S customers can initiate operations quickly without establishing a legal presence in Mexico. BF&S “shelters” our customers from many risks and liabilities.

BF&S performs these tasks and functions that are not core to the manufacturing process, allowing our clients to focus on those areas that affect their profitability and growth.

Other Industries We Serve:

Learn more by continuing to explore our website.

Manufacturing with Shelter Service Companies

What are Shelter Companies?

third part supplier through shelter service company

A shelter company is a third-party supplier that provides real estate and other resources to complete a project. At the same time, the hiring party retains full control.

Through a Mexican government-supported shelter program, companies do not have to pay income tax in Mexico for four years, while the Mexican shelter company “shelters” the foreign company with a manufacturing facility, raw materials, and more.


When a Mexican company is there to offer shelter services, they will secure licenses and permits needed to operate in place, allowing production to commence much faster.

Most companies that operate under a shelter contract manufacturing can be up and running in Mexico in just 3-6 months.

What Shelter Services are offered?

Besides obtaining licensing and permits, manufacturing communities offer various service needs. Shelter companies in Mexico provide administrative services such as HR and accounting, advisors to deal with Mexican legalities, and all the core manufacturing functions needed to carry out the manufacturing operation.

Risk & Liability

When working with a shelter company, the provider assumes much legal risk and liability. It is up to the shelter company to ensure all compliance measures are being met and that rules and regulations are being carried out appropriately.

Services offered by Shelter Companies in Mexico include:

  • Human resources and recruiting
  • Employee payroll and benefits administration
  • Customs management and import/export administration
  • Tax and fiscal compliance issues
  • Environmental and occupational health and safety
  • Purchasing negotiations and vendor relationships
  • Facilities management and real estate

The benefits of working with a Shelter Company

Access to a skilled workforce

Skilled labor, is defined as at least five years in an industry-specific role, is plentiful in Mexico. In recent years, Mexico has made it a priority to provide exceptional service to manufacturing companies. As a result, the Mexican workforce is filled with highly skilled workers who bring value to operations.

Room to grow

human resource management

A growing business means a growing output of products, but it also requires growth behind the scenes to hire more employees, organize larger-scale accounting, and more. When working with Mexico shelter companies, all of these areas are accounted for. The right shelter service provider is there to help keep up with the growth of your business.

Lower Costs

The Mexican government views the shelter manufacturing model very favorably, benefiting the Mexican economy. Companies operating under the shelter service model are rewarded through income, consumption, and import/export tax incentives.

Doing Business with Foreign Companies

mexica shelter service company

In recent years, China has been the hub for manufacturing outside the United States. Still, many businesses have been looking for an alternative closer to home with various growing issues, including cost and supply chain.

Manufacturing with Mexico shelter services offers foreign companies tax advantages, cost savings, and a skilled industrial workforce to support their manufacturing operations. There are several options available when setting up a new operation in Mexico. However, working with a shelter program is one of the most cost-effective, efficient, and safest ways to save on everything from janitorial and security costs to logistics and customs fees while completing a project.

Shelter Manufacturing with BF&S

shelter company

BF&S’ full shelter services allow our clients to have full control of their quality and production. Clients benefit from our experience and knowledge of the local market, eliminating the need to make sizable investments in physical and human assets.

Our customers can initiate operations quickly without actually establishing a legal presence in Mexico. BF&S “shelters” our customers from many risks and liabilities.

BF&S performs these tasks and functions that are not core to the manufacturing process, allowing our clients to focus on those areas that affect their profitability and growth.

Learn more by continuing to explore our website.

Fiber Optic Polishing

The fiber optic polishing process removes any excess epoxy or fiber stub left after cleaving, shapes the ferrule, and removes scratches in the glass, enabling an end finish that passes optical signals with minimum loss. It affects two types of optical loss: insertion loss and return loss.

Insertion Loss

fiber optic cable

Insertion loss is the amount of energy that a signal loses as it travels along with a cable link. It is a natural phenomenon that occurs for any type of transmission, whether it’s electricity or data.

Pre-polished connectors offer a quick and reliable alternative to unpolished connectors for horizontal and backbone termination applications. With good installation practices and attention to detail, installers can expect high termination yields and low insertion loss values.

Return Loss

Return loss is a measure of reflected light. Whenever light encounters a change in the refractive index of the material through which it is propagating, a portion of the light is reflected back toward the optical fibers.

Some of this reflected light can interfere with the proper operation of light sources, especially lasers. Because of its small core size, a single-mode fiber connection requires a high return loss to limit the amount of reflected energy.

Polishing surface area removes any excess epoxy or fiber stub from the fiber connector left after cleaving, shapes the ferrule, and removes scratches in the glass, enabling an end finish that passes optical signals with minimum return loss.

Fiber Optic Connectors

Most fiber optic connectors are plugs or so-called male connectors with a protruding ferrule that holds the fibers and aligns fibers for mating. They use a mating adapter to mate the two connector ferrules that fits the securing mechanism of the connectors (bayonet, screw-on, or snap-in.) The ferrule design is also useful as it can be used to connect directly to active devices like LEDs, VCSELs, and detectors.

Polishing Process

Fiber Optic Polishing

Polishing the fiber/ferrule end faces of a fiber-optic connector critically influences optical performance and is highly susceptible to error. Yet the polishing process is neither difficult nor mysterious. Other steps in the connector termination procedure, such as crimping, involve mechanically securing the fiber in the connector.

As the final step, polishing machines prepare the fiber optically to ensure that defects and nonuniformities in the fiber/ferrule end faces or geometry do not degrade the passage of light across the connector joint.

Singlemode Polishing

Singlemode fiber polishing is a multistage process that begins with a quick, coarse polish and ends with a final polish in a slurry. Different polishing materials are involved in each step. In most cases, a single mode fiber connector uses epoxy to hold the fiber within the ferrule. A six-step process ensures the proper techniques for polishing a single-mode fiber-optic connector.

Step one:

The first step consists of a quick hand polish with medium pressure applied using a coarse polishing film. This step removes the fiber stub and levels the protruding material (including a glass plate or epoxy) close to the ferrule.

Step two:

The second step requires a 5-micron aluminum-oxide film. Hand-applying the lapping film gently across the four corners of the fiber end face removes the epoxy down flush with a ceramic ferrule. However, this action could remove some ceramic material as well.

Step three:

In the third step, a medium-grit diamond film is used to begin shaping the fiber/ferrule end faces. Unlike aluminum oxide, the diamond film treats ceramic and glass materials similarly. This shaping minimizes undercut so that the fiber recedes only slightly into the ferrule. Because the main purpose of this step is shaping, it usually leaves visible scratches on the fiber end face.

Step four:
fiber optic cable

To remove scratches and achieve a smooth surface, a fine-grit diamond film is used next in step four. In terms of insertion loss, the finish should be acceptable at this point.

However, to obtain a high-return loss of at least -45 dB, we strongly recommend a fifth or finish step because of the altered-index layer on the fiber connectors.

During abrasive polishing, a small layer on the end of the fiber pads become altered so that its refractive index changes. This change increases reflections, producing a lower return loss, and the fifth step of the slurry polishing film is needed to remove the altered layer.

Step five:

The fifth step uses a special polishing film, which contains a top layer of the polishing slurry. Typically used while being suspended in distilled water, the slurry has both a lubricating and chemical effect on the fiber during hand application to change the refractive index back to its original value.

Step six:

The last step involves inspection. The use of a hand microscope determines polishing acceptance or nonacceptance.

Rubber Polishing Pad

Rubber pads play a critical role in polish results and are often overlooked.

Having a consistent hardness across the surface of the rubber pad is necessary for producing consistent polishing results. Rubber hardness will change over time, so rubber pads always need to be replaced periodically (annually, at minimum).

When your radius values are under control, another key geometry parameter is your Apex. This reflects the angle of the polished end-face.

If the Apex values are too large, this means your ferrules are being polished at an angle that is too large. All other conditions being equal, a smaller Radius value will generally result in a better Apex value.

If you’re already dialed in on desired Radius values and the Apex values remain unacceptable, the cause is likely related to worn polishing fixtures or worn rubber pads. In both cases, the only fix is to replace the worn fixture or rubber pad.

Fiber Optic Polishing with BF&S

Fiber optic Polishing process

Get fiber optic polishing and assemblies through BF&S. BF&S offers a turn-key solution and is currently supplying fiber optic polishing and assemblies to our clients. Clients may be required to supply MI, prints, special equipment.

Founded in 1988, BF&S has decades of experience manufacturing in Mexico, with over 500 employees in the state of Sonora.

Our warehousing and corporate offices are located in Douglas and we are incorporated in the state of Arizona.

The BF&S executive team was born and raised in the United States and runs our organization with U.S management standards and practices.

Learn more by continuing to explore our website.

Will manufacturing move out of China?

Companies are leaving China in droves. A Gartner survey of supply chain leaders showed that 33% have plans to move at least a portion of their manufacturing out of China and away from Chinese companies in favor of other countries by 2023.

The list of companies rethinking their subcontracting strategy includes everyone from Apple and Dell to the toymaker Hasbro.


china manufacturing

The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal is to ensure that trade flows as smoothly, predictably, and freely as possible.

Chinese Manufacturing

When China joined the World Trade Organization (WTO) in 2001, it was a minor player on the global manufacturing stage. But after years of reforming its economy around being the world’s factory for global companies, its formal entrance to the WTO helped its production capacity soar.

In the years since it has become the low labor costs global stage. So why are American companies and multinational companies moving production out of China’s manufacturing hub?

Supply Chains

A supply chain disruption is a breakdown in the manufacturing flow of goods and their delivery to customers.

Supply Chains and the Pandemic

The pandemic has disrupted nearly every aspect of the global supply chain. From raw materials to manufacturing facilities, Chinese exports have been greatly affected by more than just the US/China trade war. 


Scarcity, driven by the supply chain slow down has caused the prices of many things to go higher. The world’s electronics factory in places like China and those utilizing the South China Sea was hit hard by the spread of coronavirus cases in the same period.

Many factories were shut down by the Chinese government or were forced to reduce output at production facilities. In response, shipping companies cut their schedules in anticipation of a drop in the value chain for goods moving out of China and around the world.

Trade War

US Chine Trade war

A trade war is when a nation imposes tariffs or quotas on imports and foreign countries retaliate with similar forms of trade protectionism. As it escalates, a trade war reduces international trade.

Why Trade Wars are started

A trade war starts when a nation attempts to protect its domestic industry and create jobs. Tariffs are can give a competitive advantage to domestic producers of a product by creating lower prices.

As a result, they would receive more orders from local customers. As their businesses grow, they would add jobs.

But in the long run, a trade war can cost jobs. It depresses economic growth for all countries involved. It also triggers inflation when tariffs increase the prices of imports.

How the Trade War has effected China

China’s manufacturing sector slowed for the sixth month in a row last October and experienced weaker consumer demand activity in the world’s second-largest economy.

The slump mirrored a drop in retail sales growth back to a near 16-year trough and the weakest growth in investment in new plant and machinery on record.

Analysts said uncertainty about a possible pact between Beijing and Washington over a “first stage” trade deal dampened business and consumer confidence.

China was hit by a slowdown in GDP growth to 6% in the third quarter, from 6.2% in the second quarter, its lowest level in 30 years. Analysts said the latest data pointed to a further slowdown in growth in the fourth quarter.

China’s steel output fell to a seven-month low in October, while the cement production contracted for the first time in more than a year.

Global Supply Chain Leaders

Global supply chains are networks that can span across multiple continents and countries for the purpose of sourcing and supplying goods and services, such as electronics manufacturing. Global supply chains involve the flow of information, processes, and resources across the globe.

Global vs Local Supply Chain

A global supply chain utilises low-cost country sourcing and refers to the procurement of products and services from countries with lower labor rates and reduced production costs than that of the home country.

A global supply chain will usually flow from your own organisation in your home country as a buyer across your supplier tiers; it is these suppliers who will be located in other areas of the globe.

“Home Grown” Suppliers

supplier godown

A local supply chain will look to optimize suppliers who are regional to your own organization, in some instances organizations will look to leverage “homegrown” supply routes, manufacturing imports so that all suppliers feeding into your supply chain will be located within the country in which your organization is based.

This way, the supply chain can be even closer in to your organization and may even be within the same state/city/district, which often gives clearer visibility of the whole supply chain from raw material through to the consumer.

However, there are both positives and negatives with global supply chains and the total landed cost or total cost of ownership should always be factored into the true costs.

What Are the Disadvantages of Globally Sourced Goods?

  • Longer lead times – While the production time can be quite quick the lead time can often be much longer as the goods will require shipping which can add to the lad time, this means that forward planning can be a challenge.
  • Reputational risks – Risk exposure to modern slavery, brand and financial risk exposure can all be increased.
  • Fluctuations in Exchange rates – Global markets are more susceptible to regional influences that can impact trading markets.
  • Challenges in communication – There needs to be careful consideration of terminology and the type of communication methods used to interface with a global supplier to ensure information is interpreted correctly.
  • Increased risk exposure based on STEEPLED factors – As the supply chain spans over multiple countries there are increased risks of unrest in other countries having a direct impact on your supply chain activities.
  • Loss of control – Due to the distance in the working relationship it can be difficult to manage communications and oversee technical aspects of the production process. Quality issues can also be complex to manage.

For the reasons outlined above, a significant number of companies are leaving China as their manufacturing base in favor of more local industries.

Manufacturing in Mexico


Especially for U.S. companies, Mexico’s location offers huge advantages. It’s easy for managers at U.S. companies to visit facilities in Mexico on a regular basis—you could even get there and back in a day, unlike spending at least half a day just to get to China. Travel to Mexico doesn’t require as much advance planning.

Your Mexican facility will likely be in your time zone, or no more than three hours ahead or behind, so communication will be simpler as well.


Mexico is now known for having a diverse, highly-skilled workforce—many of whom are at least partly bilingual. Mexico’s labor force is also relatively young, while China’s is aging and declining due to its family planning policies.

When quality issues occur, it’s relatively easy to address them when production is in Mexico. Products can be returned to be repaired or replaced, and managers can visit the plant to fix the problem. Quality issues in China are more challenging to fix.

Labor Costs

For years, wages in China were much lower than Mexico. Now, Mexico’s manufacturing labor costs are 20% lower than in China. When adjusted for worker productivity, the gap is even wider. Mexico also offers steadier wages, so companies can more easily predict labor costs. Exchange rates between the dollar and the yuan and peso also contribute to this change.

Trade Agreements

US and China Flags

Mexico has 12 multilateral trade agreements that provide preferential trade access to 44 countries, making it one of the most open countries in the world for international trade. USMCA in particular has helped transform Mexico’s economy into one driven by manufacturing and exporting.

While Mexico has a strong trade relationship with the U.S., as evidenced by the USMCA, The China-U.S. relationship suffers from battles over import duties and tariffs. Additionally, there is an ongoing geopolitical struggle between the U.S. and China that often impacts businesses operating in both countries.

Overhead & Transportation Costs

Overhead and transportation costs are much lower in Mexico than they are in China. When you manufacture in Mexico instead of China, you can expect to save approximately:

  • 4% in energy costs
  • 60% in natural gas costs
  • 40% in lease rates

 Intellectual Property

Mexico has a strong reputation for protecting intellectual property rights. By contrast, China frequently has problems with counterfeits, and courts are slow to enforce or recognize intellectual property rights.

manufacturing unit

BF&S Manufacturing

Founded in 1988, BF&S has decades of experience manufacturing in Mexico, with over 500 employees in the state of Sonora. Our warehousing and corporate offices are located in Douglas and we are incorporated in the state of Arizona.

The BF&S executive team was born and raised in the United States and runs our organization with U.S management standards and practices.

Learn more by continuing to explore our website.

When Should Your Company Develop Its Own Software?

Every company needs and uses software, and some is a significant driver of business success. But as small companies grow to midsize, software performance gaps can emerge. Finding new software solutions can fix problems and inefficiencies and help teams develop innovative products and services. But midsize company CEOs often face a difficult choice: whether to upgrade through a vendor or develop (a.k.a. “roll”) their own code.

It’s widely understood that software upgrades are always expensive and often disruptive. Sometimes they fail completely, or they don’t deliver on their original promise. That means little or no return on money spent. But sometimes, there’s simply no off-the-shelf software available to address a business’s unique problem.

For small companies, it’s usually easier (and almost always cheaper) to do manual workarounds when their operating software isn’t up to the task. But midsize companies can lose a great deal of money and stunt their growth due to the inefficiencies that inevitably spring from such workarounds. And those tortured manual processes can prevent companies from seizing opportunities in a timely manner. For those companies, custom coding is a viable option. (Large businesses with deep pockets can build software development teams and often have the talent on board to do so.)

Most midsize companies have a “super user” who’s good at helping everyone with the capabilities already built into their software (like report writers, dashboards, etc.). And most modern enterprise resource planning (ERP) software has layers that allow for customization — often a layer where value-added resellers (VARs) can make changes and a customer layer for customer customizations. If a midsize company can get what it needs from that, fantastic. But what if it can’t?

Many midsize companies get stuck trying to decide whether to buy new software or attempt to write their own code, even if that just means connecting disparate systems. Others try to outsource the problem to a software firm. While outsourcing code creation may be part of a solution, doing so successfully requires rigorous project management — a capability not all midsize businesses have.

Meanwhile, the clock is always ticking. Efficiencies that could be realized with software aren’t retrieved, eating away at margins. Market opportunities are lost to competitors. How can midsize business leaders determine when it makes sense to build their own software?

When to Roll Your Own Code

It’s inefficient to develop custom programs for core business functions like accounting, payroll, sales tax, inventory, and customer relationship management (CRM), and so many options are readily available. But if there’s no software that does what you need it to do, you may have no choice but to roll your own, especially if there’s a high-value opportunity to seize or a significant efficiency to gain. (Creating your own code is only worthwhile if there’s a big payoff; without a strong ROI, forget about it.)

For example, in 2007, BF&S Manufacturing was gaining steam as a contract manufacturer for complex, low-volume — but critical — components for aerospace, military, medical, and industrial verticals. Its customers wanted to oversee the work, but BF&S was based in Mexico, and many of its customers didn’t want to invest the time and money to travel and stay there.

BF&S depended on a close relationship with its customers, often turning to their engineers to solve production problems. But distance and a border were making that ever more difficult. Screen-sharing and cameras alone weren’t going to be enough for its customers, and BF&S feared losing them to more closely based manufacturers, even if those businesses charged more. BF&S needed to be able to port valuable production data from its core ERP system into a format its customers could use.

BF&S CEO Carlos Fernandez looked around but couldn’t find a solution to buy. Instead, he says, “We embarked on a software program that would provide 24/7 real-time data” on the company’s product builds. It started with their “computer guy,” as Fernandez calls him, just out of college, building a tool to track raw materials, work-in-progress, and finished goods inventories and provide visibility internally and externally.

It was completed and first used in 2010. Customers loved it. Fernandez began to grow the software development team in Mexico, supporting four facilities in the state of Sonora with a combined headcount of 500. Customers could now see video of the workstations, their products’ progress at each step, BF&S’s raw and finished goods inventories, who was working on their job, and all the product stories and specs.

This custom coding required a keen understanding of both the company’s business and its customers’ needs. Originally headed by Fernandez, the team of engineers and operations leaders now plan and manage the ongoing support and development of the tool.

Today, although Fernandez won’t claim that his company’s home-built code is a huge competitive differentiator, he believes it gives his customers want they want and what he couldn’t provide through off-the-shelf software: transparency into and a measure of control over the production of their products.

The Journey and the Costs

Rolling your own code is neither simple nor cheap. Software engineers are highly paid. In the United States, that means six-figure salaries. The costs of finding and hiring engineers often involves search firms, which charge 15% to 30% of the first year’s salary, and for the past several years, even they’ve been struggling to find good candidates. On top of sourcing costs, you must interview and assess candidates for technical skills, train and onboard new hires, and provide a digital environment for development and testing.

And then you have to manage the code development tasks, making sure they’re productive. As the development department surpasses five or six engineers, you’ll need a DevOps executive to supervise it — if programmers are undermanaged, days and weeks can be lost while productivity plummets.

And you can’t just hire developers and managers and expect the magic to happen. Engineers make what the business tells them to make. They thrive on clarity. So, you’re going to need to spend time getting your arms around your business’s opportunities and needs to be able to describe the features, functions, and options you want. That software roadmap must be completed before your engineers start coding. Fail to do all this well and on time, and you’ll have very expensive talent sitting on their hands, likely looking for other places to work.

Finally, when you develop custom code, you need to maintain it. Software breaks down all the time. Hackers continually find new attack vectors. New needs pop up and users demand modifications. Even programming languages age, so every five to 10 years, software may need to be rewritten. The costs keep coming.

However, while custom coding is challenging, it can be a pivotal factor and well worth the trouble for some companies that are innovating solutions for their customers.

Corefact (a Mastering Midsized client) is a full-service marketing services provider for the real estate and mortgage industries. In 2005, the company came up with a fresh idea. If a realtor could send a postcard to a potential client with a unique URL that would take the client to a website with their own home at its center, that could be hugely appealing, and a possible game-changer. Corefact’s customers, realtors, were excited, not only by the potential appeal to their clients, but also by all the data this kind of engagement would supply them with.

Corefact couldn’t buy software to do this — it was new. Corefact’s founder and CEO Chris Burnley had always been a technologist. Prior to Corefact, he started several technology-driven companies. Thanks to this technological competency, the company found a way to print variable data — unique URLs — on postcards and then move them on to web servers that would wait for a homeowner to type in the URL, after which a new, unique website would be created instantly. By 2006, the software was launched with a single engineer.

Today the engineering team has grown to 10, located in the U.S. and abroad. They’ve created custom code that’s not only customer facing, but that also efficiently brings together thousands of daily orders through order entry, graphics, and pre-press and automates the efficient flow of work onto presses and through finishing.

Burnley says, “Our original concept put us on a fast ramp for growth, but our ability to innovate with technology continues to propel us. Of course, the investment in engineers is huge and ongoing, but the list of opportunities is long.”

But they don’t build every piece of software they use. When it came to upgrading their ERP, they chose a standard product by Netsuite, into which they’re connecting their self-made order-handling systems. Similarly, they’ve recently dropped a self-made CRM in favor of Salesforce, keeping their development team focused on creating software they can’t buy.

The Three Competencies You Need to Roll Your Own

The examples I’ve discussed require different amounts of the following three competencies, depending on how complex your custom code requirements are:

Translating business needs into software projects.

Identifying business needs — and their solutions — is a necessarily iterative process, keeping in mind the limitations of existing software, as well as your resources and available data. This is neither software development nor business management; it’s a form of engineering where one leg stands in the business and the other in a thorough understanding of how your current software systems work.

This competency could be held by one executive in a smaller midsize company, or by a small team as the organization grows. What goes in is a problem or opportunity, what comes out is a series of detailed steps to create and maintain code: exactly what data is to be used and what logic or processes should be used to produce a solution. Without all these steps, endeavoring to create custom code makes no sense.

Code development.

Depending on the circumstances, a midsize business could have one programmer or a full engineering department. For example, at my prior company, we had Dave, a young warehouse employee who coded as a hobby, come upstairs now and then for small coding projects. For bigger opportunities, code development can grow into a series of engineering teams with different skills and focuses working in a complete DevOps department, led by a VP or chief technology officer.

Software operations.

The operations side of managing custom applications is expensive — you need to maintain the health of the custom code and make sure your processes, people, and tools are kept up to date. Elements of operations include user support/help desks, training, security risk management, bug fixing, ongoing additional customization, uptime and performance attributes, and more.

Leveraging homegrown software to bring innovation to your market or to create more efficient operations can be a strong growth driver. But the buy-it vs. build-it decision is a critical one. If buying the software you need just isn’t possible, building it may make sense. But there’s no denying that’s a difficult path, and only worth it if the upside is big. Before you build, make sure you understand the real costs to succeed over the long term, and only embark on those code-writing efforts you’re sure your business is capable of.

by Robert Sher

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BF&S Succeeds in Providing COVID Vaccine to Employees Internationally

BF&S is a manufacturing contractor providing products used in the aerospace, defense, medical, industrial, and commercial industries. Founded in 1988, BF&S has decades of experience manufacturing in Mexico, with over 500 employees in the state of Sonora.

As the Covid-19 vaccine became widely available in the United States, many individuals across the border in Mexico were kept waiting for a life-saving dose. As an organization that cares deeply for its employees and works closely across border lines, BF&S was dedicated to keeping their operators safe by providing access to vaccination. 
The Mexican Consulate has been working in partnership with the University of Arizona to roll out vaccines to first responders and employees working in manufacturing. Thanks to the committed negotiations between BF&S’s Director of Operations Robert Fernandez and their human relations team, and the Mexican Consulate, six busses carrying 170 BF&S operators recently traveled across the border to receive the single dose Johnson & Johnson vaccine. Departing from Cumpas, Sonora at 1:30am to make the 3.5 hour trip across the border and through US customs, the BF&S fleet was lined up and waiting in the cargo area to receive their vaccinations by 6:00am.

“It was a big company expense,” said CEO Carlos Fernandez, “Chartering 6 buses, providing meals for 170 employees, as well as the lost revenue for the two days we closed the facility to allow our team to travel as well as recover from vaccine reactions. It was one of the easiest decisions I ever made, our employees’ health is always our number one priority.” 

“It was a good day to be a BF&S employee,” said VP Robert Fernandez, “It was seamless. I give credit to our people for being so professional. A special Thank you to H.R. manager Fatima Cabrera for the incredible coordination it took to pull this off and Miria Montano for her support.” 

As Covid-19 vaccine availability continues to be uncertain in Mexico, BF&S has gone above and beyond to provide their employees with their best line of defense against the ongoing pandemic.

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