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Benefits of outsourcing manufacturing

by Last updated Dec 21, 2023 | Published on Jun 7, 2023Contract Manufacturing

Estimated Reading Time: 5 minutes

There are a multitude of benefits of outsourcing manufacturing, which is also known as working with a contract manufacturer.  Companies outsource manufacturing of components or entire projects to keep up with the market demand and to save time and money. Those companies react to technology changes and focus on core business strengths knowing that production of their latest innovations is in capable hands.

Benefits of outsourcing manufacturing

Accomplish operational efficiency

Outsourcing manufacturing of some components or projects doesn’t mean you’re giving up operational control. You still dictate quality standards and other important benchmarks. An accomplished outsource partner follows your operational procedures as specified, delivering top-quality products. A partner is flexible about change – and can even offer you custom solutions to existing or future pain points. It’s a best practice to work with someone who comprehends complex demands within the manufacturing industry.

Access advanced equipment and technology

If your in-house production equipment is outdated, look for a partner with a reputation of high quality and accuracy. The right outsource manufacturing partner already utilizes a variety of advanced equipment and technologies, meeting the needs of original equipment manufacturers (OEM). Ask a potential outsourcing partner about existing equipment and technology and any plans to acquire newer models in the future.

Tap into specialized skills and expertise

Training your team and purchasing expensive equipment for what may be a one-off job is an expensive roll of the dice. You’re better off leveraging an outsource manufacturing partner with a significant investment into the research and development required to build and deliver consistent process control solutions for your industry. The beauty of this partnership means if an OEM only orders a component one time, you haven’t invested in machinery that sits idle.

Meet consumer demand

A skilled outsource manufacturing partner manages time with an eye toward efficiency, which saves production hours and money. Lean manufacturing tactics change with technology. For example, a partner with a cross-trained team meets or exceeds consumer demand by employing those who can handle multiple tasks in a day’s time. When one task slows, they shift to the next, often exceeding deadlines and getting products to market ahead of schedule.

Lower overhead costs 

A competent outsource manufacturing partner works closely with your team on:

  • Documenting the required work procedures for a project
  • Solidifying inventory requirements
  • Overseeing packaging needs

By doing this, there’s no time or material wasted. Ask a potential partner about existing vendor relationships, too. Working with an established manufacturer could save you money on raw materials, thanks to their solid working relationships. A partner may stock a variety of common materials in-house, which will shorten lead times by not having to wait for everything to be shipped.

Improve cost efficiency

The more experienced, better equipped and properly staffed an outsource manufacturing partner is, the better they are able to minimize your overall costs. Ask what systems a potential partner already has in place to provide the highest-quality products in the timeliest and most cost-effective manner.

Increase cash flow

By utilizing a partner’s team of experts, technology and advanced training, you quickly get a greater understanding of actual costs to produce components. Once you have an established partnership with a successful job completed, look for other opportunities to team up and save money on existing or upcoming projects.

Stay competitive in your industry

A longtime component manufacturer can evaluate your in-house operations and production to help you identify potential problem areas and spot potential risks during the process. Making repairs or consistent upgrades to ongoing projects can be a time and money suck that slows your production, giving an edge to your competition. 

A benefit of working with experts in the field means less need for fixing problems. A partner will get it right the first time. Plus, a solid outsource manufacturing partner has testing procedures in place to ensure that if a mistake does occur, it doesn’t happen twice.

Efficiently manage inventory

Keeping inventory of raw materials in-house that may not be used for months consumes both budget and precious space in production areas. Work with an outsource partner who can order and store only those materials necessary for the job. Longtime, reliable manufacturing partners, such as Axenics, have spent decades cultivating solid relationships with parts vendors.

Maintain a consistent labor force

A strong, ongoing partnership with a contract manufacturer often leads to rapid growth. You won’t have to bolster your internal team. Lean on your partner for help with increased orders. The partnership also means you can re-allocate your team to focus on higher-margin aspects of your business. By adding a strong outsource partner to your team, you can double or triple your workforce – without the need for expensive processes such as hiring and training. 

If you prefer your in-house team to focus on a brand-new project, you can reallocate your ongoing manufacturing needs to a contract manufacturer. Or, if you find a partner whose expertise aligns with your new project, let them focus on that innovation and keep your team doing what they already do best.

Reduce additional costs

  • Testing: When looking at potential partners to improve your production, it’s wise to consider a company that does its own in-house testing of components and products. Performing non-destructive testing on components before they go into production helps save time and money. You should only receive products that have been tested before delivery.
  • Packaging and shipping: Also, look for a company that will not only produce components or end-to-end solutions, but will also safely package them and get them where they need to be, whether it’s to the next stage of manufacturing or to the marketplace.

For many companies, saving money is one of the top benefits of outsourcing manufacturing. Learn more in our download Cost Savings in Outsourcing Whitepaper.

We’ve partnered with companies like yours for more than 40 years. We’ve seen every pain point scenario. Those experiences push us to become even leaner manufacturers and better outsource manufacturing partners. The adage is true: Time is money and we’re ready to save you some.

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