Outsourcing Manufacturing

Outsourcing Manufacturing

Manufacturing outsourcingis not a new concept by any means. Companies often discover that for most of their parts manufacturing, outsourcing solutions are tricky to find and negotiate due to distance, cultural difference, language barriers, international trade regulations, foreign exchange rates, and ways of doing business. Yet companies from well-developed countries have almost always used manufacturing outsourcing to save on the cost of acquisition of contract manufacturing. Outsourcing over the Internet has advantages, and has drastically increased global sourcing as associations in foreign countries are now much easier to find and forge. The Internet is not without its disadvantages as well. Recent news about corruption and fraudulent overseas manufacturer scams on the very popular Alibaba website partly owned by Yahoo, (February 2011), raised doubts about validity of manufacturing outsourcing over the ‘Net as a trustworthy tack.

As the huge costs in local raw materials and manpower soar annually, companies of all sizes find out that total expenditures can be reduced in order to earn a profit by global sourcing of materials and finished products. Since the cost of production is significantly higher in countries such as the United States, Canada, the United Kingdom and other rich nations, there is no other way for industries that require parts production in those countries to improve revenues from existing streams than outsourcing manufacturing to developing, or under-developed nations.

Countries like India, China, the Philippines, and other Asian countries that specialize in manufacturing outsourcing contracts play a key role in giving profitable advantages to big companies in North America and Europe. They do not only offer low manpower fees but also produce good quality merchandise. Overseas manufacturers can be approached individually, or can find out about RFP’s and tender their bid on production of certain manufactured parts, showing the richer country’s corporation how they could save money on that production due to consideration lower labor cost, comparable quality merchandise, and also the reliability of the nation to catch up to demands. Winning a manufacturing outsourcing bid would eventually contribute greatly to the overseas country’s economy by generating more income for its people and providing a guarantee of earning regularly from contracting companies. After the bid has been awarded, people from these developing nations will have the chance to get skills training from contractors, thereby earning money while garnering more knowledge and experience in production assemblies, plants, or factories. As they improve their business of catering to the richer countries, they become more efficient and can increase their own profit.

For many overseas countries, provision of global sourcing is a prime source of revenue. Asians are the targeted workers for many, if not most, manufacturing outsourcing strategies. Their good attitude towards work and training on production lines allows them to work without any fuss as long as they get paid on time and receive the amount they have been promised to earn. Providing benefits to workers is also one of the things that can attract developing countries to bid for outsourced contracts. When outsourcing was just beginning, companies took on just one single location for their production. Placing all the eggs in one basket was not at all good for companies who wanted longer-term production.

It is apparent that today, companies sometimes try to split into smaller contracts of what used to be larger ones and gave shortened manufacturing periods. Diversifying the outsourcing manufacturing can result in a much better timeline gain as lags in deadlines and the total number of production pieces is served. Each location in the diversified outsource project end up competing with the other location’s productivity to win more contracts and in turn serve the richer nations’ companies better. Having a smaller group to handle is less of a problem in controlling manpower skills and quality.

Manufacturing outsourcing has continued to grow more popular year by year, and it is most likely to increase in the coming years, fostering good relationships between contracting nations and outsourced locations, each side of the transaction earning advantages out of the relationship.

Contact an experienced global sourcing company such as Con-Tech International in New Orleans, Louisiana – your manufacturing outsourcing, procurement, and supply chain authority to develop new, or nurture existing, global sourcing.

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