While the word “manufacturing” may conjure up the images of dark, cold factory floors of yesteryear for some, present day manufacturers are anything but staid. Manufacturing in the 21st century has become one of the most progressive and in many cases technology-oriented industries in existence.
Mar 29, 2019 5:02:00 PM
Mar 15, 2019 8:47:40 PM
With the growth in the US economy over the past few years, combined with the efforts to “on-shore” manufacturing back to the US demand for resources is high. This current environment, with the lingering effects of the misperception that manufacturing is “20th Century”, makes hiring manufacturing talent challenging.
Aug 25, 2017 6:00:00 PM
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To outsource a product or process versus producing it in-house is a decision faced by manufacturing companies every day, and making the right choice can be key to your company’s success. A company may decide to outsource products and services for a variety of reasons. Areas of consideration should include flexibility, capacity, quality, cost and capability.
Topics: outsourced manufacturing
Nov 20, 2014 2:23:24 PM
The decision to outsource product assembly and manufacturing is not black and white.
For many Original Equipment Manufacturer (OEM) companies, outsourcing manufacturing and product development includes many grey areas where various advantages and disadvantages need to be weighed. Especially when it comes to comparing different contract manufacturers against one another, the differences aren’t always clear – meaning your final decision isn’t always an easy one.
To help you distinguish reliable outsourced product assembly partners from those that aren’t a good fit for your OEM company, here are the top four facts you need to know:
Nov 13, 2014 8:42:00 AM
As an Original Equipment Manufacturer (OEM), you need to select an outsourced contract manufacturer with care: It’s not just your company’s production quality on the line, but your reputation as well.
That’s why many OEM companies choose private label manufacturers with an ISO certification, to ensure that any potential manufacturing partner meets an objective standard of quality.
But ISO 9001 certification shouldn’t be your only measure of selecting an outsourced manufacturing partner. Here’s why:
Sep 24, 2014 11:46:53 AM
Every Original Equipment Manufacturer (OEM) or contract manufacturer has a diverse portfolio of clients – some are large, high-volume accounts and others make smaller, less-frequent orders.
Despite this diversity, many OEMs believe that they should provide the same level of customer experience and service to all of their clients, but they’re wrong.
Prioritizing Your Customers According To The 80/20 Rule
Why? Remember the 80/20 Principle: 80% of an outcome results from 20% of its causes. So, if you’re an OEM or private label manufacturer, the 80/20 Principle translates into 80% of your company’s revenue coming from only 20% of your customers.
Such a major revenue disparity means that only a handful of your customers are powering most of your OEM business – and they deserve to be treated accordingly.
Aug 5, 2014 11:23:00 AM
Outsourcing manufacturing is an important decision for any Original Equipment Manufacturer (OEM), and often in the process of finding a reliable contract manufacturing partner, an OEM overlooks a number of variables. By far, the most overlooked factor is indirect costs.
Before outsourcing, it’s important that you understand all of the true costs of manufacturing. That way, you’re able to consider all of the factors involved when selecting and comparing different contract manufacturers. With a more level comparison, you’re better equipped to make the best decision for your business.
Many times, an OEM company simply compares the internal direct costs of labor and materials to the final price of outsourcing manufacturing with a partner. However, your true cost of manufacturing a particular product line or piece of equipment isn’t just the sum of direct costs from your Bill of Material list and manpower assembly costs.
Calculating Indirect Costs
This approach doesn’t account for your own indirect factory overhead costs (including both fixed and variable costs). To complete a true comparison of in-house manufacturing versus outsourced production, you need to calculate and consider your indirect costs, which often include the following factors:
Production floor space (including depreciation, rent and property taxes)
Production facility utilities (electricity, natural gas, water and sewer for all manufacturing facilities and equipment)
Production equipment costs
Miscellaneous material expense items
Inventory and inventory control
Production equipment depreciation
Insurance for equipment and facilities
IT personnel (for all computer and communications systems used with the manufacturing functions)
Accounting department personnel
Purchasing department personnel
Receiving department personnel
Factory floor record-keeping personnel
Factory equipment setup personnel
Production equipment maintenance personnel and outside repair support costs
Supplies for operating production equipment
Production floor janitorial service personnel
Material handling personnel (such as forklift operators who move materials throughout the factory)
Inspection department personnel
Factory management personnel
Other general and administrative costs (G&A)