It’s the age-old question for OEMs – is it better to make components in-house or outsource manufacturing? When you consider cost, quality, control, compliance, and other factors, there isn’t always a simple, clear-cut answer. However, in today’s competitive market, more and more companies are reducing costs and improving their bottom lines by working with a single-source manufacturer, also known as a contract manufacturing organization (CMO).
Here are 7 ways that outsourcing manufacturing can benefit your product and business.
Improved focus on core competencies – Far too often, internal product teams are spread too thin. Shifting manufacturing to a trusted manufacturing partner frees up professionals to focus on what they do best – design, engineering, testing, marketing, etc. – and the crucial tasks that drive your company’s success.
Access to specialized expertise – The unique challenges of manufacturing specific components can go beyond your internal team’s capabilities. This is where a CMO with materials, printing, and converting expertise can provide extraordinary value. During the design phase, your partner can make recommendations to improve product design and quality, accelerate speed to market, improve manufacturability, and more.
Built-in quality and safety standards – You need to be confident that your products are made to the highest quality, safety, and compliance standards. Giving up this internal control can be one of the biggest concerns for OEMs looking to make the switch to outsourced manufacturing. But by vetting potential partners, this barrier is easy to overcome. A reputable manufacturing partner will have a proven Quality Management System (QMS) in place (so you don’t have to create or adapt one yourself), along with risk management plans and appropriate accreditation from ISO, FDA, and other organizations.
Reduced labor costs. When you outsource your manufacturing, you're not just reducing the cost of labor on the floor. You're also minimizing HR resources, training, management time, overtime pay, sick and holiday pay, and other labor costs.
Seamlessly scale up or down – Production demands can be unpredictable. When you're manufacturing in-house, it can be difficult to scale up quickly, and costly to scale down. That's not a concern when you're outsourcing – which means you can be more flexible and agile reacting to the market's ever-changing demands throughout the product life cycle.
Reduce equipment costs – Machinery, software, and other assets can be a significant investment – and one that doesn’t always offer a positive ROI. By outsourcing manufacturing, you won’t have to worry about large equipment purchases or on-going costs such as maintenance, depreciation, screens, plates, and other fixtures. Instead, you can free up working capital that can be used more effectively elsewhere.
Streamlined processes – There are enough moving pieces while designing and producing a product that any area you can simplify is beneficial. Using a single-source CMO can reduce supplier audits, minimize variability, consolidate accounting, and more.
Choosing a manufacturing partner.
The optimal approach to manufacturing is individual to every company. It's important to consider how outsourcing can impact (and potentially improve) all aspects of your operation – from product development to quality assurance to logistics. You also don't want to rush into an agreement or blindly go with the lowest-cost manufacturing, or you could risk the quality of your product. Once you find a reliable, trusted manufacturing partner, you can start taking advantage of the many benefits of outsourcing.
Check out some of our other pieces about outsourced manufacturing:
A Case Study in Outsourced Manufacturing -Learn more about how an active package manufacturer successfully delegated its converting and printing operations to Tapecon in just ten months realizing several benefits related to supply chain, costs and business growth.