Outsource the process. Keep control of the requirement.
Outsourced manufacturing allows companies to access production capability, specialized equipment, additional capacity, or technical expertise through outside manufacturing partners.
Manufacturing can be outsourced one operation at a time or as an entire production program.
Process Outsourcing
One operation such as machining, coating, heat treatment, forming, or assembly is performed externally.
Capacity Outsourcing
Outside production is used when internal equipment or labor cannot support demand.
Specialized Production
Manufacturing is placed with suppliers that operate equipment or processes not available internally.
Turnkey Outsourcing
A supplier may manage materials, production, component sourcing, assembly, testing, packaging, and delivery.
Outsourcing decisions begin with more than unit price.
Compare supplier pricing with equipment, tooling, maintenance, facility, and labor investment.
Determine whether the required process knowledge already exists internally.
Forecast whether expected demand justifies internal equipment and dedicated capacity.
Consider whether the manufacturing process itself provides competitive or intellectual-property value.
Evaluate transportation, material sourcing, tooling, supplier concentration, and production continuity.
Moving production outside also moves part of the operating system outside.
The supplier's scheduling, equipment maintenance, workforce, subcontractors, material availability, inspection, and documentation become part of the buyer's production environment.
The cheapest quoted unit price may not create the lowest production cost.
Tooling
Dedicated molds, dies, fixtures, gauges, and engineering changes affect program economics.
Logistics
Freight, packaging, customs, inventory, and transportation time influence landed cost.
Quality
Inspection, rework, scrap, supplier corrective action, and production interruptions create additional cost.
Inventory
Longer replenishment cycles can increase safety stock and working-capital requirements.
Engineering Support
Design changes and troubleshooting may require supplier response and manufacturing engineering involvement.
Supply Continuity
Backup suppliers, redundant tooling, capacity protection, and risk mitigation can change total cost.
Compare outsourcing options before selecting a production location.
Domestic and offshore manufacturing models create different tradeoffs in cost, communication, lead time, logistics, inventory, and risk.
Domestic vs. Offshore Manufacturing →