Manufacturer outsourcing is more commonly referred to as production outsourcing. As with every single outsourcing form out there, there are advantages and disadvantages that appear and that you have to consider in order to make a good decision, one that is beneficial for your company.
Keep in mind that in this case, we are referring to outsourcing with a company that is in the same country. If there is another country where the production takes place, it is referred to as off-shoring manufacturing. As you can imagine, these are controversial, especially in the USA, where there is a big focus put on local labor force. However, for many companies the advantages are hard not to take into account.
Access To Lower Production Costs
It is so much cheaper to rent workers and an entire factory than to maintain everything yourself. The entrepreneurs are constantly looking for contract manufacturers that would offer more services than just production, like shipping and storing the products that are created. In many cases the charges are associated with how much of the factory’s workforce is used and how much storage space is occupied. No matter how we look at things, the costs are a lot lower and this is the main reason why people choose production outsourcing.
Access To A Skilled Workforce
In most cases you automatically gain access to technically skilled and highly educated workers. This is hard to gain as you try to expand your services. Overseas, you find this at just a fraction of the salaries you would need to deal with in the US. The company basically has the huge advantage of being sure that production goes on smoothly, without having to worry about having to invest a lot in order to gain that.
The Appearance Of Security Problems
In the US and in most countries from around the world, bribery is illegal. However, in many of the countries that you may consider to outsource production to, this is a way of life. If you do not respect the local rules, those that are not associated with low, you can end up with huge problems as security is not as high as it should be. Before you outsource to any country, you need to learn about political situations, corruption rates, terrorism and crime so that your company would not be affected.
Loss Of Control
As you outsource manufacturing, you do hand out a part of the daily activity control that you have. The contractor becomes responsible and you cannot check every single thing, every single day. It is really important that you always remain careful about that. There are various situations in which control is lost as the factory is servicing other customers before you.