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