Deciding where to set up your manufacturing is key to the structure of your supply chain. Every business is unique and making a decision that is right for you and the stage of your company is vital. In this post, we will explore the arguments for manufacturing in-house or outsourcing so that you can make an informed decision that is right for your business.
The advantages of In-house Manufacturing
When you manufacture in-house, you are in control of the process from start to finish. This gives you the flexibility to adapt as and when you see fit. This is especially useful when you want to respond to the market quickly and make a consumer-led change to your product because you don’t have to go through another company or rely on anyone else.
In-house manufacturing has the potential to have a quick and seamless process between design, engineering, product development and production. This is because it is simpler in-house and easier to control. The supply chain manager can access all of the departments first hand and make immediate contact whenever required. This can speed the process of manufacturing up from the prototype onwards. This speed can make it easier to customise products for customers that a want bespoke service. With less ‘middle men’ any specific instructions are easier to communicate
The Advantages of Outsourcing Manufacturing
Labour costs are always the biggest cost of any manufacturing process. When you outsource your manufacturing you haven’t got to take on the responsibility and costs involved in hiring the staff required to do the job properly. The company that you outsource too will hire and look after the staff, leaving you with a lower labour cost bill and a lot less obligation. Some managers don’t always initially account to include roles such as equipment technicians, handlers, shipping and receiving staff and quality assurance experts. Even a relatively small operation physically needs people to allow it to run smoothly and this can be a detrimental drain on the business accounts.
There are other savings to be made when outsourcing manufacturing especially in terms of your general overheads. It is an expensive process to have a manufacturing facility and foot all the bills. These include gas, water, electricity, maintenance or equipment, licences and insurance.
Now although we touched on increased flexibility with in-house manufacturing, it is worth pointing out on this side of the argument, that with the right company and relationship, more flexibility can actually be achieved through outsourcing.
This is because the contractor has more capacity for production so it is easier and quicker for them to respond to changes in the market demand. If an increase of production is required suddenly, a contractor doesn’t have to invest in more machinery, resources or staff because they already have what they need.
Some contractors specialise in the bespoke and can easily adapt for customisations and alterations to products. What is important is that if you do want to outsource, you do your research and ascertain which company is best able to meet your ever-changing needs.
Outsourcing any aspect of your business is more than just a logistical or economic decision. When you make a decision to outsource elements of your business that are not your area of expertise, you actually give your business the space it needs to grow. You and those around you are able to focus on what they are good at, developing products and services and building relationships up with customers that lead to sales. Trying to do everything yourself when it is not your skill can take your attention from the core of the business and reduce motivation. Outsourcing can be a liberating and profitable experience for any business.