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Industrial Automation and Motion Control Blog | The Knotts Company

Can Outsourcing be Cost Effective for Your Business?

Posted by Mark Guida on February 24, 2011 11:11 AM

External Resources Grow BusinessIn 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.


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


     • 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.

Topics: cost savings, manufacturing, cost effective, industrial automation nj/ny, resource, external resource, outsource, outsourcing, technology, core competencies, assembly