Should You Outsource Manufacturing?

Outsourcing manufacturing processes is an attractive option for many companies, but is it a viable option for you?

Here’s a guide to help determine if outsourcing manufacturing is the best use of your time and money.

When Should You Outsource Manufacturing?

Outsourcing may be a valuable option for your company if your answer is yes to the following three questions.

Can an Outsourced Company Provide the Product at a Lower Cost?

The most important question relates to cost. Will outsourcing provide you with better financial outcomes to offset its cost?

In most cases, outsourcing your manufacturing means reducing company labor costs. Outsourcing enables you to be effecient with your production labor. 

Outsourcing also cuts down on the many overhead costs that come with manufacturing operations, such as gas, utilities, water, electricity and maintenance.

Manufacturing equipment is a significant purchase for any company, and may or may not offer a positive return on investment (ROI). Outsourcing manufacturing minimizes capital expenditures by eliminating the need to invest in large machinery for your facility. In turn, you can use the freed up capital in other areas of your business.

Can a Manufacturing Partner Meet Your Quality and Production Standards?

Even if outsourcing is a cheaper option for your company, it’s important that your manufacturing partner meet or exceed your product quality and production expectations. This will enable you to continue to deliver high-quality goods to your customers.

Before hiring a contract manufacturer, you should verify that the company can:

• Create a high-quality product.
• Test and pack products effectively.
• Deliver orders on time and in full.
• Provide you with detailed, timely and accurate information.

Are You Dealing With Large Product Volumes?

It’s helpful to consider your product volume needs before outsourcing your manufacturing. If your company produces small volumes, you likely have the personnel and resources necessary to maintain production. As your product demand grows, you might require additional resources to keep up with higher order volumes.

If your current manufacturing strategy can’t handle larger volumes, you should consider outsourcing to supplement your resources and better meet rising demands.