By Michael Zhou
In the manufacturing world, companies must choose where they make their products. Many companies choose to outsource this work to other companies, sometimes in other countries, to save money. Even if you build relationships with manufacturing suppliers, there are also many reasons to consider manufacturing products in-house instead. As the owner of a company with a new product, you might wonder why you should keep manufacturing in-house. In-house production may in fact be cheaper and more efficient than outsourcing. Read on to discover the reasons in-house manufacturing is better than outsourcing.
Keeping manufacturing in-house gives you a lot of flexibility to change the product. If you discover an outsourced product needs a last-minute change, it would take time and trouble to implement it. You’d have to contact the manufacturing company and negotiate, while they keep making the old product. With in-house manufacturing, your research department only has to inform your manufacturing department of the change and send them updated blueprints. This speed ensures that you can change your product to fit a changing market without lost time and manpower.
You can better control the quality of the product with in-house production. As you may know, if is very important for businesses to practice quality control. Quality is a major problem with outsourcing. The manufacturing company you outsource to will have numerous clients producing multiple products. Unless you are ordering a large quantity, they will not give your order a lot of attention. Working in-house, your team can keep careful track of your product. They can follow stricter standards of quality control since they are producing only your product. As a result, your product has better quality control.
Lower Management Costs
Producing your product in-house can avoid a lot of management costs associated with outsourcing. The only way to keep an eye on your outsourced production is to hire managers to oversee the outsourcing company. In the case of foreign outsourcing, these managers need to be in the foreign country, and speak the native language there. These on-sight managers are essential to maintain quality control and solve problems. If you produce the product in-house, you can do without this layer of management, since you have direct control of production. As a result, it costs your company less in overhead to build the product.
Control of Production
When you manufacture in-house, you have complete control over the product output. Using resource planning, you can plan for production spikes by having enough labor and equipment for meet demand. If you anticipate a large boost in order, buy a used machinery to alleviate capacity constraints. Click here for more info on buying machinery whenever demand requires it. When you have total control of production, it is much easier to meet demand.
In-house manufacturing can save you time and money logistically. Transporting products can cost as much as producing them in the first place. If your products must cross international borders to reach their market, this cost will increase in the form of customs duties. On top of that, you also need to transport the raw materials to the factory for production. In the digital manufacturing sector, there are several components that are needed for the end product. If your company is closer to your market then the outsourcer is, you can save a lot of money in transport costs.
In-house production lets you control issues with public relations. A lot of customers try to avoid companies that outsource their manufacturing. Foreign outsourcing has gained a negative image from many people for a variety of reasons. Bad press over outsourcing could hurt your products sales, cutting into your profits. Many times, outsourcing can become bad news for your company. Additionally, angry customers might turn to their politicians to investigate or otherwise hinder your business. In-house production for your product can avoid expensive entanglements with angry customers and the press.
There are several reasons to manufacture in-house instead of outsourcing production. It gives your company a lot flexibility to alter the product as you produce it. In-house production ensures higher quality control. With production in-house, you can keep your overhead low by avoiding foreign managers. You can cut logistic costs of higher shipping rates and customs duties. Moreover, in-house production lets you avoid the public relations risks associated with outsourcing. These reasons ensure that in-house manufacturing will save you time and money in the long run. When managed properly, in-house manufacturing is better than outsourcing.
Michael Zhou is a Senior VP of Business Intelligence Development and has assisted the Fortune 1000 company with expertise in the web as a whole, including ground-zero marketing efforts that benefit both consumer and vendor. He is also contributor on Esprittoday.