Should You Outsource Your Production?
If you sell one or more physical products as part of your business, you might have been advised to outsource your production, so that you can save money and maximise your profits, but is it really a good idea to do so?
It’s fair to say that there are many advantages and disadvantages to having a third party, or multiple third parties manufacture your products for you. So, here are some of the most important things you should consider before you make a decision either way:
#Pro: You Will Save Money
Should you outsource your production, you won’t have to invest in quite so many assets, which means your cash flow situation will be much improved. You will also be able to benefit from the lower costs of production in many areas around the world.
#Pro: You Can Choose a World Leader
If you outsource your production, you can choose from the cream of the crop of manufacturers in your niche, which means that your product could be one of the best on the market, with all of the latest technological advances to help you boost sales.
#Pro: You’ll Have Greater Flexibility
When you’re outsourcing product manufacturing, you’ll have more flexibility because you won’t have to deal with onsite issues and any resources you would have used to deal with manufacturing can be redirected to other tasks.
#Con: You Can’t Guarantee Quality
Even if you choose the seemingly best manufacture in your field, it’s impossible to ensure that they use the quality parts you would like. For example, they may be tempted to cut corners by switching a high-quality fire sprinkler flow switch for a cheaper one with moving parts, and this would make your product less desirable than it was before. So you do need to make absolutely sure of a company’s integrity before you outsource your production to them.
#Con: Loss of Skill
If you outsource your production instead of investing in your own team to manufacture your products, you will not build up the kind of product skill and expertise you might otherwise. This means that you will need to keep relying on third parties and your products might not be quite so competitive as a result.
#Con: You’re Dependent on Suppliers
If you don’t make your own products, you’re completely at the mercy of your suppliers. So, if they experience technical issues or start cutting corners, there won’t be much you can do about it – not for a while at least, and your reputation could suffer as a result.
#Con: Costs will Be Out of Your Control
When you manufacture your own goods, you can, at least to some extent, control your products’ bottom line. You can make small changes to save money, and you can keep refining your technique until the process is costing you less. When you outsource to a supplier, however, all of that is largely out of your control, and you will just have to pay the price they ask, which won’t necessarily be the right price.
As you can see, there are lots of pros and cons to outsource your production, and you will need to weigh up each to see which method suits you best. Don’t be hasty, take your time and you will come to the right conclusions.
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