Almost all manufacturers have to do some outsourcing – whether it’s ordering supplies or sub-contracting non-core manufacturing processes. Making the right outsourcing moves can help you to save money, speed up production and improve your reputation. The wrong outsourcing moves could meanwhile lead delays, complaints and recalls.
What are some tips for making the right outsourcing moves? This post covers a few golden nuggets of wisdom that will help you to choose the most reliable and cost-effective vendors.
- Weigh up the advantages of onshoring vs nearshoring vs offshoring
Start by considering whether onshoring, nearshoring or offshoring is a better fit for your goals. Each has their own advantages depending on your goals.
- Onshoring: This involves hiring a vendor in the same country as you. It’s ideal for just-in-time production, reduced shipping costs and ‘made in the UK’ branding – but you may have limited local manufacturers to work with and labour costs may be higher.
- Nearshoring: This involves hiring a vendor in a nearby country. It could provide a middle ground between onshoring and offshoring in some cases – allowing you to access specialist services not found in the UK without having to look too far.
- Offshoring: This involves hiring a vendor in a faraway country. It could be necessary for some specialist resources and tasks and could offer significantly cheaper labour costs, but could come with extra shipping costs and communication challenges.
Ultimately, you need to consider your priorities – weigh up the impact that different location choices may have on cost, speed, control and risk.
- Make sure that they have relevant experience
It’s important that a vendor has experience with the exact material or part that you need. Make sure that their product is suitable for your industry – if you are a perfume manufacturer looking for a glass bottle supplier, you may not necessarily want to use a glass bottle manufacturer that has only produced bottles for beverages.
Look at case studies of orders they’ve previously completed and check what they know about your industry’s standards by asking questions. This will help you to find a vendor that is the right fit.
- Check for Six Sigma certification
Quality and consistency should never be an afterthought when outsourcing. One strong signal of trust is whether a factory embraces structured improvement methodologies like Six Sigma.
This could be vital when it comes to services like polymer dispersions where there cannot be any variability in quality. If staff are trained in Lean Six Sigma, they are likely to have strict quality controls in place to maintain consistency. Other forms of specialist certification could also be worth looking into when judging the quality of certain vendors.
- Ask for a cost breakdown
Don’t just look at the headline price when getting quotes from other manufacturers. Where possible, ask for a detailed cost breakdown that separates materials, labour and other overheads.
Such a breakdown will help you to better understand how a price was calculated and give you more room for potential negotiation. A vendor willing to provide itemised billing also shows a level of transparency, which is important for trust. A breakdown of costs also helps when sharing your own bill of materials with clients – if they ask why a certain part costs so much, you can reference the cost breakdown provided by the manufacturer of that part.
- Think about future scalability
The right manufacturer needs to be able to not just carry out your current demands but any future increasing demands. This saves you being limited to small batches or having to migrate to another manufacturer at a later date.
Some vendors will have maximum volumes and minimum volumes, while others may be able to provide a more flexible service to accommodate small and large batches. By getting an idea as to who they have partnered with before, you can get a better idea as to what demands they are used to. Scalability may not be necessary if you exclusively deal with small batches, but if you’re working with clients who are likely to grow and ask for increased orders in the future, you need to think ahead so you’re not held back by your manufacturing partners and suppliers.
- Don’t skip the factory visit
A lot of suppliers know how to make everything look good on paper. A factory visit reveals the realities of how a company is run – labour conditions, cleanliness, organization and quality controls. They’re a behind-the-scenes look at the manufacturing process.
A trustworthy supplier should have no qualms about arranging a factory visit. If they deny you this opportunity, think about what might imply. If a factory is located far away and you don’t want to travel there in person, consider whether a vendor may still be able to arrange a video tour. When collecting quotes for large orders, some manufacturers may even openly offer factory visits to win you over and even pay for travel/accomodation.
- Invest in prototypes and pilot projects
Rushing straight from quote to full production can often be risky when it comes to custom-made components. In these cases, it’s useful to pay for prototypes or run small pilot batches to get an accurate idea of the quality that a manufacturer can provide before you go full-scale.
You could even use multiple early runs to fine-tune results before committing to large volumes (such as testing out different materials, ingredients or finishes). This structured approach also makes your RFQ process more meaningful, because you’ll have real world data on things like scrap rates, cycle times and yields.
A Summary
Selecting suppliers shouldn’t just be about chasing the lowest cost. While it’s important that you do stick within a budget, you need to take various measures to test for quality. You also need to find a vendor that can handle the production speed, volumes and industry standards that you demand. Ultimately, it’s a case of being thorough when vetting manufacturers and material suppliers. When outsourced partners are carefully chosen, stress is reduced and your own company reputation improves.