---
title: Can Outsourcing be Cost Effective for Your Business?
description: Cost savings and better business through outsourcing to innovative external resources and not slashing local positions.
---

[Automation and Motion Control Blog ](https://blog.knottsco.com/blog)

# [Can Outsourcing be Cost Effective for Your Business?](https://blog.knottsco.com/blog/bid/26592/Can-Outsourcing-be-Cost-Effective-for-Your-Business)

 Written by [Mark Guida](https://blog.knottsco.com/blog/author/mark-guida) | Feb 24, 2011 4:11:00 PM

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.

[View full post](https://blog.knottsco.com/blog/bid/26592/Can-Outsourcing-be-Cost-Effective-for-Your-Business)

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