Reduce inventory – Improve quality – Increase capacity – Mitigate risks – Reduce lead-time
Due to the uncertain and fast changing nature of modern markets many major OEMs have included outsourcing as an integral part of their manufacturing strategy.
The benefits and reasons for outsourcing differ for each company, but some of the advantages include:
• Fixed cost of manufacture – the often difficult to manage variable costs of manufacturing are fixed.
• Non-core manufacturing processes are undertaken by a specialist provider with greater experience and skills, improving product quality.
• Improved cash flow due to reduced investment in stock.
• Reduction in stock, work in progress and stock write off’s.
• Reduction in recruitment costs, skills shortages, and sub-contract labour costs (when reacting to peaks and troughs in product demand).
• Reduced supply chain management costs, with greater control of costs, stock, and labour and the ability to more easily downscale in declining market conditions.
• Increase in capacity – available resources such as manufacturing space, can be better utilized or redirected to other core processes.
• Reduced lead times due to reductions in overall manufacturing times (due to your teams and ours manufacturing in parallel.)