This is when you hire people outside your company to produce a part or product. There are many reasons a company may choose to outsource a product. Outsource manufacturing has allowed many thousands of companies to successfully build their businesses by getting their products made more cost efficiently.
When Should You Outsource your Manufacturing?
There are many benefits to outsourcing your product, and many different reasons why people outsource their production jobs.
The main reason companies all over the world outsource their manufacturing needs is to save on overhead costs. Companies often see a significant savings in production costs when they outsource most jobs from labor and material costs. China has a surplus of steel production which has given them in edge in pricing on many steel products. The savings you can get from sourcing from overseas can range anywhere from 50%-70% of the domestic cost of manufacturing, even with tariffs.
Other reasons companies may choose to outsource is they don’t have the expertise or equipment to make a part. For example a circuit board company may be excellent at producing wiring or other electrical components, but may not have the machinery to produce housing or cases for the products they make.
A factory or machine shop may choose to outsource a product to free up staff and equipment to work on other projects that may require more focused attention. A part in high demand with high overhead costs can be ideal to outsource. This would allow their team to focus on parts that require a more delicate or dedicated touch to produce.
It’s also a good idea to outsource newly invented products. With most startups, it’s absolutely necessary to make the most out of every dollar in your budget. By having your products produced and imported from offshore, you’ll be able to have more time to spend on other areas that demand your attention, such as marketing or meeting with investors.
How to use Outsourcing to Manufacture Your Product
In order to maximize your savings when outsourcing, you should pick an overseas company. Finding a qualified company can be difficult on your own however. It’s not easy to verify a company from just a website or posting on Alibaba. You really have no way of knowing if the person on the other end of the website is a scammer, a quality factory, or a company that may or may not have the equipment and expertise to work on your project. The solution to this is to use sourcing agents.
Working with Experienced Sourcing Agents
At Global Trade Specialists, located in the heart of Chandler, Arizona, our agents will take your designs to our partners in China who will go directly to the factory and negotiate pricing on your behalf, inspect the shipment, and arrange freight. You can rest assured that you are dealing with a legitimate factory, and we’ll make sure your parts get made to your specifications or we’ll replace or compensate you with our replacement policy.
If you are interested in outsourcing your project or have more questions, contact us.