Manufacturing involves the interplay of many factors, some of which are controllable, others aren’t. Business leaders always have to be on the front foot, developing new products and strategies, defending the business against threats and looking for opportunities to gain an advantage. Outsourcing is often seen as an answer, but is it?
While outsourcing part of your process – or a service – to a third party might seem a simple solution, you should never ignore the complexities. There are pros and cons. These can affect everything from your productivity to your company culture.
Let’s dive in and explore some of the benefits and challenges you might face.
The benefits of outsourcing
Speed to market:
You can bring a new product to market faster if you’re not trying to do everything yourself. Use a third party’s skills and infrastructure to support and accelerate your new venture.
Staffing and skills:
Outsourcing can solve many of the headaches around recruitment, training and retention of staff. Through outsourcing, you may be able to access specialist skills and knowledge that would otherwise be unaffordable or impractical.
Outsourcing gives you access to a huge talent pool, and these days, that talent pool is borderless. You may find third-party contractors who can deliver the quality and reliable service you need for a much lower cost than you could with either permanent or temporary contracted employees.
Knowledge and innovation:
Every industry has its ground-breaking pioneers, thought leaders and renowned experts. When you purchase their services, you gain access to that well of insight and ideas.
The challenges of outsourcing
Lack of control:
Even the best outsourcing contracts cannot guarantee there will be no issues. The world is unpredictable. You inevitably give away some of your ability to control events when you outsource.
Outsourcing often involves working with overseas suppliers. What happens if shipping is delayed? Or if there’s industrial action at a distribution hub? Does your whole operation grind to a halt for reasons outside your control?
Imagine losing your contract to supply X, a product made using component Y, but you’ve agreed to buy Y from Joe Bloggs Industries for another two years.
Quality:
Ensuring quality becomes more complex. Your contracted supplier may have a reputation for unblemished performance, but how does that impact your in-house processes or accreditations? What happens if an order you are dependent upon arrives and although it’s within agreed tolerance limits, it slows your progress or upsets some of your most valued clients?
The issue of quality resonates with us a lot because we’ve had customers approach us in the past, stung by shoddy, outsourced components. Seeking control and reliability, they chose to bring their production back in-house by investing in their own machinery.
Confidentiality and security:
How much of your sensitive business information are you going to reveal? Will your IT systems have to communicate with those of your new partner? Can you trust them? Can they trust you? What clauses will you need in a contract to protect your business?
Your culture:
This is a big one. Think about it.
You could upset your employees. You could damage your customers’ loyalty. You could affect your identity as an end-to-end manufacturer. You could have more difficulty recruiting. You could fundamentally change the direction of your operation.
So, is outsourcing the answer?
The answer is that outsourcing should be carefully considered. It can bring huge benefits but there can be significant challenges. Take time to think, and understand this crucial point:
Outsourcing is not a reason to relax, sit back and let someone else take the strain. It’s something that, like every other aspect of manufacturing, requires ongoing management.
