Invested in Relationships…
Originally posted by John Hornberger on February 3, 2020
If you’ve come to this blog to learn about the ins and outs of outsource manufacturing, you’ve come to the right place. Outsource manufacturing is the process of hiring people or organizations outside of your company to manufacture parts and products, assemble parts into products, or to build entire products for you and your company. The biggest reason a company would consider outsourced manufacturing is to save money…in labor, overhead and production costs.
There are many ways manufacturing companies can benefit from outsourcing their production…the biggest reason being cost savings. Typically, businesses will opt to manufacture their products or particular parts for their products in the hopes of making their fixed costs fully variable. The rule of thumb is that if any aspect of your production line has the potential to be completed quicker and at a cheaper cost elsewhere, it’s best to consider outsourcing than to keep production in-house. We’ve listed some additional benefits of outsourcing below:
As a business, it’s your goal to offer the best quality products and services to your customers at the best possible pricing. If you choose to outsource, you need to find the best contract manufacturing organization (CMO) that offers the solutions you’re looking for. Ensure that questions are repeatedly asked to the CMO’s including:
Since there are hundreds, if not thousands, of CMO’s in the world, it’s important to do your research on the companies that would be the best fit for your production and supply chain needs.
Here at CSI, we are proud to be the best in supply chain services. CSI provides custom-crafted solutions for industries such as bearings manufacturers, gears manufacturers, sprockets manufacturers, stamping manufacturers, and more.
So you’ve found the right CMO, or a couple of CMO’s that appear able to deliver the parts you need at the right price…excellent! The next step is to develop an RFP (Request for proposal). An RFP is a document that solicits proposal, often made through a bidding process, by an agency or company interested in procurement of a commodity, service, or valuable asset to potential suppliers to submit business proposals. In short, this is the document where you will define your business objectives and state the requirements that your manufacturer must live up to.
Below is a basic outline of what an RFP will contain:
You’re now off to the races with outsourcing! You’ve issued your RFP, and you’re awaiting responses for quote evaluation. Tune in to our blog next month where we detail our recommendations for thorough quote evaluation, as well as onboarding a new outsourcing partner!
Original article reposted here with permission
Original article: https://blog.componentsourcing.com/csi/what-you-need-to-know-about-outsource-manufacturing