Outsourcing is key to the success of many manufacturing companies. Few companies have the money and time to manufacture everything in-house from scratch, which often means relying on the help of other manufacturers to create select parts. On top of this, there are admin tasks like accounting and marketing which can be valuable to outsource.
All in all, outsourcing can save money and time, but you need to be careful as to exactly what you outsource and who you outsource to. This post offers a few tips for manufacturers that can explain exactly how to outsource properly.
Keep your supply chain streamlined
While outsourcing can save money in many cases, you need to be careful of outsourcing too many different services – eventually the costs will add up and it will no longer become profitable. The more suppliers you hire, the more challenging it can also become to keep track of them all. Communicating with them all may actually take up too much of your time, and you could find yourself forgetting about suppliers and missing payments.
Once your supply chain starts to become time-consuming or expensive to manage, you may want to consider streamlining your supply chain. If one supplier can do the job of three, consider whether you really need three different ones. Similarly, get rid of any unnecessary suppliers that you’re not getting good use out of such as marketing companies that aren’t getting results or printing services you rarely use.
Opt specialist for quality, general for cost
When it comes to ordering parts/materials or delegating marketing tasks, you should consider whether quality or cost is more important. If you need the best quality available, you’re typically better off hiring a company that specialises in that product or service. If quality isn’t too important and you’ve got a tight budget, you should consider using a more general company to save money.
For instance if you need to order stainless steel strip and it needs to be top quality stainless steel, you could find that you’re better off focusing on a company that specialises in stainless steel strip. If cost is more of a priority, you could find that you’re able to save money by looking into a more general metal supplier or one that provides stainless steel but specialises in another metal.
Weigh up the pros and cons of outsourcing locally vs outsourcing overseas
Working with local companies can have many benefits. You can be certain that they meet local standards and that they speak your language, plus the service should be faster (especially when ordering supplies).
That said, an overseas company could save you money in some cases. You could also find that certain materials or parts cannot be sourced locally – or at least not to the same standard as overseas. In these cases, outsourcing overseas may be better.
Research a supplier’s reputation
It’s important that you work with suppliers that have a good reputation. This is important because a) it could give you an idea as to the overall quality of the product or service you could expect, and b) working with shady or unethical company could have a knock-on effect on your reputation.
You could research a supplier’s reputation by reading reviews, looking at search engine results and looking them up on social media.
Know when to do it in-house
There are times when it could be better to do a task in-house rather than outsourcing it. If you’ve already got the machinery and knowledge to manufacture a part, there’s generally no use in outsourcing manufacture of this part. Similarly, there may be admin tasks that you have the knowledge and resources for – if you think you can handle it just as effectively as a third-party professional, you’re usually better off handling it yourself.