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To outsource complete manufacturing of a product versus producing it in-house is a decision faced by original equipment manufacturers every day, and making the right choice can be key to the success of your business. A manufacturing company may decide to outsource products and services for a variety of reasons. To gain better insight from a client perspective, I recently asked one of our most-valued customers what were some of the reasons their business chose to partner with us for contract manufacturing. Their decision to outsource was researched thoroughly, and in the end, the company realized a host of tangible and intangible benefits. Below find the 10 reasons our customer chose Fusion OEM:
- Indirect Cost Savings. Outsourcing provides significant cost savings when considering all the indirect costs associated with the purchasing and landing of all the components that go into building the final product, management of the raw parts inventory and finished goods in the facility, record keeping management, management of the production team personnel, facility, and quality control costs. Also, at Fusion, we helped our customer realize direct cost savings due to economies of scale and higher throughput efficiency.
- Reduce Opportunity Costs. When a production facility is tied up with non-core products, it stifles the company’s ability to provide core products that their customers expect in a timely manner. Outsourcing to Fusion allowed their internal resources to focus exclusively on their core products, essentially following the Pareto Principle to do what they do best, and let us take care of the rest.
- Strong Quality Management Systems. With their company’s reputation on the line, our customer needed to be highly selective when choosing a contract manufacturer, and our ISO 9001:2015 and AS9100D quality management certifications guaranteed the highest level of customer satisfaction and quality. These international standards ensure that every aspect of a contract manufacturer’s business is well-run, including key processes, management roles and responsibilities, documentation, customer satisfaction, employee training, production, service and internal audits.
- Reliable Supply Chain Management. Outsourcing supply chain management allowed our customer access to skilled procurement experts in instances where demand or cost would not justify maintaining an internal resource. Furthermore, they also gained access to extensive and relevant vendor networks, providing additional opportunities to establish new supplier relationships. Managing their supply chain with our built-in infrastructure ties the manufacturing process together in a streamlined, cohesive manner.
- Accelerated Delivery. By combining our range of suppliers and vendors with our in-house machining and assembly capabilities, we are able to provide the resources that our customer needs faster. As a result, they are able to accelerate the product to market and ahead of schedule.
- Availability of Service. Our lean manufacturing processes can offer quality when in-house skills can be a challenge to obtain. Additionally, there may be times when certain manufacturing processes are not strategic for the client’s company vision. Fusion can supplement their existing staff and skills, thereby becoming a seamless extension of their business.
- Expertise. High quality products can be secured by outsourcing from specialized contract manufacturers like Fusion OEM to achieve a higher level of efficiency and performance. Outsourcing to us allowed our customer to take advantage of industry expertise and innovation, reducing their overall bottom line. They also realized the benefit of our Design for Manufacturing (DFM) services.
- Temporary Flexibility and Scale. Outsourcing provides the ability to increase or reduce output in response to changes in market demand. When our customers are faced with short term demand that exceeds current production rates, outsourcing to Fusion provides increased capacity to maintain responsiveness and avoid increased lead time.
- People and Processes. Employees are our most valuable asset – our clients hire us for our people and processes. Our rapid growth requires continual focus on hiring manufacturing talent with both the technical and soft skills required to be successful. Using lean thinking to streamline our hiring processes has given us increased efficiency and employees that are the right fit for our team, and transfers the challenges of employee management from our client.
- Ease of Entry. Partnering with a contract manufacturer like Fusion OEM serves as a low-cost point of entry for new businesses as well as a low-cost test bed for “startups” within a larger enterprise. Companies are free to experiment and innovate within their allocated budgets, without worrying about costs spiraling out of control.
When you truly contrast the price of outsourcing production to your internal opportunity costs, the best business solution becomes immediately apparent. Hearing these points directly from our client was truly a refreshing perspective on the benefits of partnering with Fusion OEM. As always, I am grateful for the strength of our partnerships and look forward to providing additional outsourced manufacturing solutions to their business.