Top five things you should know about outsourcing

Here are the top five things you should know about out sourcing. Outsourcing is the process of a manufacturing company using a sub company in another country usually, for the manufacturing of parts or products for their overall business. This is why it is done, what happens and the main things you should know about the process.

#1

First you need to know that manufacturing is the process of taking raw materials and making something out of it. Outsourcing is the use of another company or part of a company to complete products from the raw materials. So you will see that when a company has parts that need to be made, if they do not have enough employees, supplies, time etc, they would hire an outsource to complete the manufactured products.

#2

The start up of outsourcing for a company may be rather expensive. This is because many times there is not a process already set up. However, once the set up is complete, the costs are not nearly as high as the standard manufacturing costs a business would have to work with.

The start up usually means the leasing or purchasing of a building. That is unless the business you are outsourcing with already has one. There are the costs for training the new employees. Finally there are costs for getting supplies and products to and from the outsourced location.

#3

The cost for labor, when outsourcing to another country, will be significantly less than the costs in the United States. That is why so often manufacturing companies will opt to outsourcing. Labor in the states can be double or triple the wages that you would pay in another country.

If you can find that the lower cost of wages out weigh the price of the set up. Then it is a very good idea to look up outsourcing companies or what it would cost you to set up our own outsourced plant. It is up to you to decide what will be better.

#4

If you are not able to produce a specific level of parts or products from your normal location for manufacturing, outsourcing on a short term or temporary basis may be a good option for you. This is just so that you can get through the larger demanded times or when a larger contract comes through.

Often times a business will find that it is going to not only save them money, but it will also make them money to outsource if they have times of large demand, but other times of less demand. Who wants to hire and fire employees? Or have a larger than needed building simply because twice per year the demand for their product is larger than any other time. This is where you will need to weigh out the costs.

#5

Management of the outsourced facility can tend to be a problem sometimes. This is because you cannot be in two places at one time. If you do not have a person you can trust to manage the manufacturing of the manufacturing, you will find there can be problems. There are often times also problems with the different management styles.

Different cultures have different ways of working. With this in mind be sure to have clear expectations set up from the very beginning. Make sure there are policies and plans in place to handle these types of concerns and issues.

Overall these are the top five things you need to know about outsourcing. So make sure to research your options and you will find that outsourcing may be the best thing for your company to do.