Outsourcing is the process of contracting out your product manufacturing to another company in another country. As technology has improved and telecommunications have become more readily available, more companies are taking advantage of manufacturing outsourcing as an alternative to producing products in-house. If you are considering outsourcing your manufacturing, here are four outsourcing options and what they mean for your business’s bottom line and overall efficiency.
A brief overview of outsourcing
Outsourcing is a proven way to reduce costs, increase efficiency, and bring multiple international resources together to help with global business needs. Many organizations use outsourcing for such tasks as accounting, call-center support, software development, or engineering design. However, few think of it as a viable option for sourcing their manufacturing needs. Outsourcing lets you save money on production while working with manufacturers that specialize in your type of product (or if needed, in your location). It’s also a way to make sure all products are handled efficiently and as safely as possible. Few businesses have an extra floor (or an extra building) dedicated solely to warehousing or shipping items from around the world. Outsourcing makes sense to reduce costs for your end customers and increase the speed of delivery.
Different types of outsourced manufacturing
The four main types of outsourced manufacturing are die, mold, sheet metal parts, and assemblies. Which type you choose to outsource will depend on your individual project. However, each one is still usually done in a similar way. A customer would first begin by finding a company that can help them manufacture their product. Next, they would provide design documents that outline where parts are needed to be manufactured as well as what each part looks like.
Examples of well-known brands that outsource their manufacturing
In fact, well-known brands that outsource include such familiar names as Johnson Controls, Lear, Tyco, Facebook, Apple, GM, FORD, JLR, Mercedes, Nokia. And there are dozens more. These larger companies have figured out outsourcing’s benefits: flexible operations that can respond to market demands; access to better talent; freedom from in-house bottlenecks; an opportunity to differentiate through design.
3 benefits of outsourcing your manufacturing
Cost-saving – By outsourcing your product, you’re guaranteeing that a cheaper or more efficient option is in place to create your product. Speed – Without having to manufacture in-house, you can launch your product much faster (in days or weeks). Efficiency – You know what else goes down with speed? Efficiency! As soon as you get your prototype, it can go straight into production. This helps your production without slowing down by anything in between.
How to pick the right outsourcing company for your needs
Outsourcing is not a one-size-fits-all solution. This service has evolved to include a range of offshore and onshore models. It has allowed customers to choose which model suits their needs best. An ideal company would be those with an onshore presence (Americas) and offshore presence (Asia/Africa). When choosing an outsourcing company, it’s important to consider factors such as experience, quality, and delivery. Quality is an important part of your success as a business; you have to correctly manufacture your product or service or it won’t sell.
When should you consider outsourcing your manufacturing?
The offshore partner you choose will depend on several factors. These include their experience in design to manufacturing, quality, delivery on time, and cost. Before you decide to go overseas, it’s a good idea to get in touch with some local manufacturers and ask them what they can do. Find out how much they charge per unit; ask how long they would need to fulfill an order of your choosing.
If you find that domestic manufacturers are comparable in price, design, and deliver when promised, then outsourcing is probably not for you. However, if these criteria don’t apply to your situation, consider outsourcing. You can reduce costs and increase efficiency by finding another company that does specialize in these things.