Fluid Power Support Blog
The question: To manufacture in-house or outsource manufacturing?
To answer the question of whether to manufacture yourself or to outsource manufacturing we need break down the benefits of each. Manufacturers need to weigh factors like turnaround time, equipment costs, labor costs, taxes, facility, proximity to distribution, and the list goes on and on...
Total Control- When you manufacture the whole product yourself you have total control. When things are going right total control of manufacturing a product is great and a seamless.
Turnaround Time- Turnaround time can be shorter when you manufacture a product yourself. You don’t have to rely on outside vendors to supply parts or completed products to you.
Outsourcing The Manufacturing
Diversification- Outsourcing manufacturing or parts of manufacturing helps reduce the risks while maintaining a quick turnaround on product delivery.
Equipment Costs- Outsourcing manufacturing in whole or part will reduce your upfront capital expenditures on costly equipment. For example a powder coat line can cost upwards of $1 million or more which would tie up your money for a long period of time. By outsourcing manufacturing and powder coating your company will save money by not having to invest in costly equipment. Another cost of equipment is maintenance. Each day equipment needs to be maintained to work efficiently and safely. Maintenance takes time and money that needs to be factored in. By outsourcing you effectively have reduced your liability exposure onto another company who has the high equipment and labor burden.
Labor Costs- Labor is one of the top expenses in manufacturing. As you know the expenses with employees are wage, taxes, insurance, training and benefits. In many regions finding qualified skilled employees is becoming a challenge for manufacturers. Manufacturing is becoming more technical and the workforce is not keeping up. By outsourcing you do not have to worry about finding a skilled workforce.
Manufacturing Facility- Manufacturing typically takes an ample amount of floor space due to the large equipment footprint and considering the safety of employees and optimal workflow. Buildings are expensive to build and maintain. You can have a smaller building by outsourcing.
Proximity To Distribution- For example if your company headquarters are on the East coast but your distribution warehouse is located centrally in the United States it makes sense to have manufacturing close to your distribution to save on turnaround time and transportation costs.
Turnaround Time- Outsourcing can reduce turnaround time by ensuring that parts or whole products get manufactured on time every time.
Outsourcing manufacturing can save your company money and reduce the turnaround time. It may make sense for your company to outsource the whole part, some of the parts, or just the powder coating/assembly. Having strong partners is usually a smart position to take.
Fluid Power Support located in Mexico, Missouri is centrally positioned in the United States and is only an hour and a half drive from St. Louis, Missouri. We’re a large metal fabrication and production powder coating company and would be happy to bid on your jobs. Feel free to call us at (573) 581-8200.