Most organisations decide to outsource their manufacturing operations in the hopes of making fixed costs completely variable. Outsourcing is usually preferable when any portion of your manufacturing process – from the initial conceptualization to the finished product – can be completed quickly and inexpensively somewhere else.
According to a Forrester study, businesses that outsource manufacturing tasks can save anywhere from 20% to 80%. The actual quantity of savings depends on the outsourced manufacturing services the company uses. The type of company and its size also has an impact on the rate of savings under such an arrangement.
In this blog, we will shed light on three critical areas of manufacturing outsourcing:
- Common challenges in the current manufacturing industry landscape
- Three key reasons why you should outsource processes in manufacturing industry
- Benefits of outsourcing in the manufacturing industry
Challenges in the Current Manufacturing Industry Landscape
Forecasting future demand
Predicting future demand is a challenging task. The main reason for this problem is the lack of right reporting systems that would enable them to anticipate how many products they should sell in the upcoming months or years. Manufacturers should employ software like cloud-based ERPs [Enterprise Resource Planning] and Sales Management Systems to create accurate forecasts. Factors like foreign exchange rates, rising gasoline prices, and current market trends should also be considered.
Staying abreast with technological advancements
Irrespective of the industry vertical, it is practically necessary for businesses to innovate and adopt new technology. Technology like the Internet of Things, robotics, ERP tools, and other manufacturing-related software are gaining popularity. Although some businesses have fully embraced modern technologies, many manufacturers continue to employ legacy systems.
Scant inventory management
Manual stock checks are ineffective and prone to mistakes, which can lead to errors, shortages, excess, and unreported losses. Poor or insufficient inventory management puts manufacturing organisations under a lot of pressure and makes it difficult for them to maintain track of their inventory and provide consistently high-quality products that satisfy their customers’ expectations.
Automated solutions can completely change things, yet many organisations are unaware of this.
Three Key Reasons Why you Should Outsource Manufacturing Industry
It isn’t easy to get a clear-cut answer on whether outsourcing is a viable option for you. We have rounded up three key areas to make it easy for you. If you agree with these three major arguments, outsourcing your manufacturing makes sense.
1. When you want to reduce labour costs
If reducing labor costs is on the top of your priority list, then outsourcing could be a wise decision. Even while there are general humanitarian and compliance considerations involved, deploying outsourcing in the right way can be a viable option.
For every business, purchasing manufacturing equipment is a big investment that may or may not result in a profit (ROI). By outsourcing, you can eliminate the need to buy expensive machinery for your business and significantly reduce capital expenses. You can then invest the freed-up money in other parts of your company.
2. When you want to meet quality and production standards without sweating
Delivering continuous customer satisfaction means meeting quality and production standards at all times. And that is no easy task. It’s a strenuous process and can suck up a lot of your time and effort. By partnering with the right outsourcing firm, you can accrue detailed, timely, and accurate information, create high-quality products, test products effectively, and deliver them on time and in full.
3. When you are dealing with large product volumes
If your business only produces products in smaller volumes, you probably have the staff and assets needed to keep up the production. As your product requirement grows, it calls for additional resources and infrastructure to meet those demands. If you are finding it difficult to handle larger product volumes, you should think about outsourcing to complement your existing resources and effectively fulfil the growing demand.
Like to know more about strategic partnerships? Here’s a great blog offering 4 powerful tips for using strategic partnerships to augment business growth rapidly.
Benefits of Outsourcing in the Manufacturing Industry
When you outsource, you’ll experience all of the following advantages for your company:
- Avoid additional labour costs
- Access to the latest tools and technology
- Reduced overhead expenses
- Achieve greater scalability
- Increased support for growing demands
- Maximized process efficiency
Getting the best out of outsourcing is not just opting for it; it is all about partnering with the right outsourcing firm, which can make your life much easier. If you are looking for expert outsourcing guidance and support? Look no further.
We at Blue Helion provide custom outsourcing solutions for enterprise transformation and strategic growth. Our sound business plans, coupled with the right execution approach, are designed to complement and support your core business idea. We can equip your organisations with advanced technological support and create a bed-rock strategy to help you adapt and flourish in the ever-changing market landscape.
Get a free 20-minute consultation with our outsourcing expert