Advantages and disadvantages of production outsourcing



What is outsourcing?

For some time now, we have often heard about outsourcing or outsourcing of services, but there is a great debate about it. What advantages and disadvantages does it present? From Pinexports we have compiled a series of relevant factors in decision-making to outsource processes, especially when it depends on third parties such as international manufacturing or the expansion of equipment by certain departments.

Outsourcing represents the contracting of third parties to carry out a task of the company. It is obtaining benefits from an external provider.

A study carried out by Whitelane Research indicates that one of the main reasons for contracting technological outsourcing is to reduce costs. As reported, the level of satisfaction of the companies that perform it with respect to this type of service is 92%. According to data from IDC Research Spain, 82% of large companies have outsourced their services or technological infrastructures in recent years, thus placing the business network in the main focus of technological development. For this reason, it is trusted that subcontracting helps to a great extent to achieve the objectives of the company, to improve profitability and competitiveness between the different markets.

The supply chain

The supply chain is one of the most complex parts of a company, but when resources are optimized, great benefits can be obtained such as reduced costs, higher margins, better product quality and, above all, everything, the customer experience adapted to their needs.

When talking about custom manufacturing, the inconveniences begin to grow due to the increase in international costs, delays or incidents in transport and the macroeconomic situations of the moment in which the manufacturing process is located.

Manufacturing is an unprecedented challenge, in which more and more external help is sought to control part or all of the supply chain. At Pinexports, we believe that the following four reasons are essential to study the option of having a manufacturing partner, with whom the manufacturing process can be developed from start to finish and See the company grow progressively.

  1. Optimization of time in other areas of the company
  2. It is important to note that dealing with different areas of the company takes time and in some situations requires solving problems that inevitably occur during the manufacturing process.

    Working closely with an experienced manufacturing partner gives you peace of mind knowing that specialized personnel and inspectors in the factory are managing the entire process. Outsourcing to audited production centers will save you time and allow you to strengthen and grow your business in other areas. For this, it is important to highlight that there must be fluid communication between both parties, to know at all times what state each process is in, if there may be possible delays or solve any incident that may occur unexpectedly.

  3. Cost savings
  4. Companies that choose to outsource the manufacturing process obtain greater cost savings. Supply chains, as a general rule, are expensive. However, by employing an experienced manufacturing link, you will end up with a significant amount of savings. It is increasingly common to see how sociopolitical and macroeconomic factors affect the course of day-to-day business.

    Added to this are the manufacturing costs, the equipment involved, transportation -whether air or sea-, customs fees and, even more so, the corresponding inflation. All these mentioned costs represent a relevant economic burden for companies, it is one of the most important points to reflect on when outsourcing processes.

  5. Risk reduction
  6. By expanding the volume of business with less investment at stake, the risks are considerably reduced. Risk reduction refers to possible logistics delays between ports, assuming customs procedures, delays in the manufacturing process, etc. It is a factor to take into account to continue with other internal plans in the company, such as increasing productivity, being able to invest more development time towards an international expansion plan, etc.

  7. Team expansion
  8. One of the advantages of outsourcing processes is being able to count on a specialized team in a field -which is normally not controlled from within the entity itself- for advice and 'know-how' on certain operations and phases of the production process.

    It is a way to expand the team without counting the costs that this entails and, in addition, to have extra experience when requesting information on certifications, legislation, customs procedures, etc. that, in many small or medium-sized companies, there is no department in charge of these processes.

    It is a possibility to be able to take the company one step further towards digitalization, taking advantage of the resources offered by the subcontractor, providing great advantages to the entity.

Team strategic alignment

These four mentioned factors are important, but it must also be considered that an alignment between the teams, definition of tasks and assignment by departments coexist internally. Undoubtedly, the most relevant factor for all the objectives to have the same goal is that the management of the company must present a real commitment to outsourcing and believe in it. It is the optimal way for all departments to be committed and for the communication between the company that decides to outsource its services and the company that implements the entire external process, have the same purpose.

At Pinexports, we accompany the buyers, design and product development team throughout the manufacturing process to make it easier for operations to flow and for both teams to be aligned. It is a development that goes through various parts, from the initial presentation of the product and its needs, the construction of a plan in which the development delimits the technical characteristics that are required, to the definition of the timings necessary to have the product finished in the customer facilities on time. Our team is involved in the process from start to finish, making the client participate at all times in any benefit they may have during the development of manufacturing.

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