Industrial Automation and Motion Control Blog | The Knotts Company

In these times of economic uncertainty, outsourcing has become a popular option to have a small, or sometimes not so small, set of components assembled off-site.  “Outsourcing” used to mean cutting local jobs, but not today.  A more accurate term in today’s market is external resource.   Using external resources offers many benefits to your business.  Below is a short list detailing the top reasons companies have shifted to using external resources.

Economic

     • You Focus On Your Core Competencies
     • Capital/Cash Conservation
     • You Reduce Cost and Risk

Technology

     • Complexity
     • Process Capabilities
     • Engineering Scarcities

Supply Chain

     • Reduce Time-To-Market/Cost
     • Optimize Leverage and Responsiveness
     • Best Technology
     • Cost Effective Price

How do you know this is the right path for your company?  The following list of 5 measurable advantages compiled by The Association for Manufacturing Excellence lays out exactly how much an external resource can affect your business in a good way.

1. Outsourcing allows manufacturing companies to focus on their core competencies instead of wasting time learning non-core functions
2. By using external manufacturing, a company can increases its core competency differentiation.
3. Companies that outsource typically show a 20% improvement in quality and reliability.
4. Cost of goods sold typically improves by 30%.
5. Flexibility and responsiveness are improved due to:
   1. Better process equipment
   2. More expertise in manufacturing personnel
   3. Reduced purchasing lead times
   4. Inventory turnover typically jumps from 4 to 9.

Finding the right external resource provider is crucial to the success of your outsourcing program.  Let The Knotts Company show you how it can be done the right way.