7 Key Benefits of Outsourcing Manufacturing
Is your business considering outsourcing the manufacturing of your products?
While businesses strive to complete their work in-house, it’s not always possible. This is especially true when changes in demand take place and greater facilities are in need.
Fortunately, businesses today have the option of outsourcing their manufacturing. In fact, over 300,000 U.S. jobs continue to outsource each year. Not only does this make higher volumes of production possible, but it also has other benefits.
If you’re considering outsourcing your manufacturing, you’re going to want to read this. We’re uncovering seven of the most significant benefits of outsourcing manufacturing.
1. Lower Labor Cost
First and foremost, outsourcing manufacturing can result in significant savings for companies.
This can be through labor costs, product costs, employee costs, and facility costs. For example, labor that may be costly in one’s home country is often less costly in an emerging market. Because wages are less expensive, payroll taxes are also less.
With such significant savings with labor costs, businesses can use this money on other avenues of their business. This is what allows businesses to continue to grow and expand.
2. Supports Increased Demand
The production of goods requires adequate space, mechanisms, and employees.
As the business grows, so too do the resources needed to accommodate this growth. More space will be required for production, more mechanisms and machines and more employees to facilitate this growth.
While growth is almost always a positive step for businesses, it can be challenging for businesses to accommodate this growth. Fortunately, outsourcing manufacturing can lessen the challenges of growth. It can also make growth possible in the first place.
3. More Room for Innovation
When choosing to outsource your manufacturing, businesses are then able to focus on other avenues of their business.
When no longer responsible for production, businesses can turn their attention to other areas of business. This could be anything from marketing to establishing new and innovative products. It may also include focusing on volunteer aspects and increasing their online presence.
This is all while resting assured that the products are being properly manufactured and transported.
4. Reduced Real Estate Costs
In order to manufacture products, most businesses begin with purchasing a warehouse facility.
Initially purchasing such a warehouse is a significant expense to the business. As time goes on, the cost of maintaining such a property continues to get more and more costly.
Of course, most businesses have to pay a rent or mortgage on the property. Other costs include insurance, property taxes, utility costs, security measures, and operating costs. At the end of the day, it’s clear that these real estate costs begin to add up.
In choosing to outsource manufacturing, many businesses are then able to sell or shut down their warehouses. Even if the production costs are only slightly less overseas, the opportunity to no longer pay real estate fees may be worth it alone.
5. Morality Control
When the topic of outsourcing manufacturing presents itself, many naturally question the morality of such an act.
It’s only natural to question how the outside workers are being treated on the job and if they are being adequately compensated for their work.
Fortunately, outside manufacturers that have high-quality moral standards do exist in today’s world. Human rights campaigns are becoming more prominent and this can result in many changes. As a result, many countries outside of North America are committing to more strict human rights morals.
With the right determination, every business can find a manufacturer that aligns with their moral compass.
6. Contract Work
One of the most significant benefits of outsourcing manufacturing is the assigning of contracts.
Businesses often find it more beneficial to hire out certain tasks. This is compared to hiring full-time staff to accommodate that same job.
Outsourced manufacturing is often contract work that involves a specific period of time. In establishing these contracts, businesses resist hiring full-time employees and the associated costs.
7. High Quality and Professionalism
Outsourcing manufacturing allows businesses to locate workers that are professionals in their field.
While many associate outside manufacturing with poor quality products, this is simply not always the case. Let’s consider that Apple is a high-quality company that produces exceptional products.
They’re also a company that is considered to be wildly successful. In fact, Apple is credited to be the third most successful company in the world. This is also a company that outsources the majority of their manufacturing to China.
This example outlines the fact that it is possible to locate outside manufacturing that is competent.
Remember, your business has the ability to select which manufacturer best lines up with your morals and desires. This gives your business the power to locate a manufacturer that is just right for your business.
The Benefits of Outsourcing Manufacturing
When it comes to producing the best product possible, many businesses strive for their business plan to be as local as possible.
Unfortunately, this isn’t always a feasible nor realistic option for businesses. This is especially the case in terms of finances where it can be extremely costly to manufacture goods in one’s home country. As a result, the product may suffer and the chances of creating a profitable business are lessened.
However, businesses do have the option of outsourcing their manufacturing. Not only is this profitable in terms of reduced labor cost, it also provides a number of other benefits.
To learn more about how outsourcing manufacturing can benefit your business, be sure to visit our blog!