Outsourcing your manufacturing is not just a matter of convenience for SME’s.
It can be a pre-requisite for survival for some of the largest and most innovative companies in the world. Without the ability to sub-out manufacturing to contract manufacturers, companies simply lack the economies of scale that allow them to effectively compete with aggressive competitors or navigate around market encumberments with a degree of flexibility. As product’s become more complex so does the nature in which they are manufactured and with this the ability to invest in – and routinely upgrade the equipment, personnel and process technology required to compete in a market of shrinking product life-cycles and eroding margins.
SME’s will likely face tougher challenges than their larger competitors when it comes to outsourcing, but finding the right contract manufacturing partner can make all the difference, one who already has established robust business processes and is willing to negotiate win/win pricing and contract terms, and invest time and resources in the relationship going forward.
We’ve identified some outsourcing risks and issues that are unique to SME’s, with the intention of helping you establish long-term success in outsourcing your manufacturing.
- Finding the right sized Contract manufacturer for your product. Not all contract manufacturers with the capabilities you need will be interested in the amount of business you can offer. So make your business the right proportion of a CM’s revenue, and confirm interest before engaging in a lengthy RFQ process.
- Forecast with reasonable accuracy. Forecasts are uncertain, but they set the foundation for your credibility with a Contract Manufacturer. Make forecasting a collaborative, cross-functional, and institutionalised process within your company.
- Reduce your inventory liabilities. Inventory liability is often unknown or ignored until crisis occurs. Focus on inventory exposure throughout your supply chain to regularly assess and mitigate liability risk.
- Eliminate pricing surprises. Speeding through the sourcing process can lead to pricing inaccuracies and mistakes. Seek to understand the details behind pricing, and focus on price structure, not just the bottom line.
- Monitoring quality before and after shipment. Your product quality must be at par with your large competitors. Look for quality problems on the manufacturing line, not just in the field.
- Managing product changes effectively. With frequent product changes, establishing the “single point of truth” can be difficult. Utilise tools that provide your internal organization and your Contract manufacturer with real-time visibility to the “single point of truth”
- Assigning the right team. The Contract Manufacturing team that wins your business often isn’t the team that services your account. Make sure you make a strong and positive impression in how you approach the CM sourcing process.
- Assessing the total cost of offshore manufacturing. Taking your products offshore has many hidden costs that you must uncover before making the transition. Develop a cost model to assess feasibility before taking steps to manufacture offshore.
- Ensure compliance with environmental directives. Compliance management cannot be entirely outsourced to your CM. Develop an environmental compliance strategy for your products and ensure adequate product documentation in case of an audit.
Tharsus takes a knowledge based, sophisticated approach to get the performance, motivation and mindshare that we need to make the best products in the UK across a wide range of market sectors, making manufacturing outsourcing a competitive advantage for our customers at every point in the process. By partnering with us you get more than just a contract manufacturer, you gain access to our knowledge vaults, technology building blocks, development and management teams all here to ensure your product takes the right path to becoming a commercially successful product.