Pros and Cons of Outsourcing
Outsourcing production is a top consideration for companies who want to reduce overhead, improve their production ability, and increase their profit margins. Also known as “offshoring”, outsourcing works by assigning projects or tasks to an outside company that may be better suited for mass production. Relinquishing control of a project to another company is a big decision that can make or break an organization. Before outsourcing any manufacturing overseas you need to know the biggest pros and cons of outsourcing mass production.
Pros
Reduce Overhead
Very few companies have the human and material resources to build, equip, and staff an entire factory on-the-spot. Additionally, the costs to manufacture in other producer countries (like tech-savvy Taiwan for example) can be significantly less than production domestically. Outsourcing can provide a great opportunity for companies to hand off projects to those best suited for them, reducing overhead in both labor and materials.
Maintain Focus
Your company has a mission and a focus – don’t get bogged down in the details. Outsourcing mass production can free up time and resources, allowing you to focus your energies on company growth and marketing strategy. Handing over control of a manufacturing project to a trusted partner can eliminate a multitude of distractions and stressors.
Access Talent
When you outsource production, you’re bringing a team of dedicated and specialized talent into the fold. Outsourcing provides access to the knowledge and experience amassed by firms with decades of mass production and industry knowledge. These experts can help you discover alternate production methods, different materials, and other cost-saving measures you may not be exposed to otherwise.
Maximize Time
Outsourcing overseas opens your business up to new working hours – your parts can be made while you sleep. Additionally, many of the same holidays that force domestic businesses to close are not recognized overseas, opening up more production days per year and improving delivery time. Domestic holidays like Easter, Thanksgiving, and the 4th of July become full production days and your company never has to slow down.
Cons
Quality Issues
When you send a project offshore you lose direct control over the materials and methods used in production. Some nations have gained negative reputations for poor manufacturing quality, driving more and more companies to break away from traditional suppliers for alternate, modernized manufacturers. Updated websites, proper language, and a company history are things to look for when browsing online for a mass producer. It is good practice to look beyond the cheapest bids you receive, as the savings are often only temporary after wasted production runs and an upset customer base.
Delivery Delays
Once a project is sent overseas the clock starts ticking. When it doesn’t show up on time, you have a problem. Poor communication, empty promises, and lack of passion about your project from the manufacturer all contribute to significant delays in delivery, creating worry and costs that could have been avoided. When choosing an outsourced manufacturer shop for one concerned about more than just the invoice.
Legal Concerns
The same laws that govern your company may not (and likely don’t) apply where your manufacturer is located. There is very little (aside from successful employee management) to stop an overseas employee from taking your idea, design, or schematic and reproducing it without your consent. With a little research and investigation you can locate a professional manufacturer you trust and who hires well. It will make all the difference.
Communication Troubles
Translation errors often result in a direct loss in revenue. Additionally, language barriers can make it difficult to convey your company message to the manufacturer, resulting in a product that doesn’t completely represent your organization or ideals. A dedicated translator can overcome this obstacle but the additional cost, along with the lack of direct engagement you’ll have with the manufacturer can be frustrating, undermining the potential benefit. Beyond troubles finding common language, some overseas firms can be near impossible to contact once they’ve taken on your project causing additional grief, stress, and expense.
When you choose where to outsource you’re doing more than handing off a job – you’re choosing your partner for the production journey. With the right partner the sky is the limit. We would love to talk about your idea or design and tell you about the stack of advantages that ALLJACK offers. If you’re ready to take your company to the next level of production and revenue, call us today!
