Should You Automate or Outsource?
In order for a company to succeed, it needs to constantly ensure that its practices are as efficient as possible. Lowering costs, labor, production time and other factors will allow your business to remain competitive. In regards to manufacturing, two main options to consider are automating in-house operations vs. outsourcing production.
First, let’s consider AUTOMATION. This includes an initial investment of time and capital. You must assess the process, plan how technology can be incorporated, purchase and install the correct machinery and train anyone that will interact or maintain the automated production. The benefits of this effort are often seen within the first year of cost savings, and the technology can add flexibility and versatility if the company needs change over time. Automated robots such as cobots can be reassigned quickly if the product changes. Often times, the built-in controls allow them to be repurposed without complicated maintenance or programming. They also reduce downtime compared to relying on a human workforce requiring job training and time off for rest, illness or unplanned emergencies. Often, one skilled person operating automation tools can be a more reliable, cost-effective, safe solution than employing and supervising many unskilled people.
Next, we compare OUTSOURCING. For an item that is being ordered infrequently or in shorter runs, outsourcing it on an as-needed basis from a third-party manufacturer can offer several benefits. Your company’s production space, labor force, and schedule are simplified by eliminating a process. Additionally, if the third party manufacturer can leverage economies of scale by aggregating similar manufacturing needs from multiple businesses, their costs will likely be lower than any single operation. However, there are limitations with outsourcing, such as a loss of quality control and added time to process orders and move goods.
When considering which option may add greater benefit to your company’s operations, there are several important factors to consider. Some examples include: Does automation technology exist currently for your needs? Will it be cost-effective to invest in, now or in the future? If your product changes, will you be able to repurpose or resell your automation components? What degree of quality control do you need to maintain? Is your product proprietary or are there security risks with outsourcing?
Ultimately, the past, present and future strategies must be identified and compared.
If you are looking to make some strategic operational changes for your company and would like experienced help, please contact us at 800-340-0854 or visit us online for more information.
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