Outsourcing is the contracting out of a business process to another party. Outsourcing programs date back for decades in the business and manufacturing world, as there are many benefits to be found.
Here are the top 4:
By outsourcing a process, floor space is freed up for something else, and many times employee head counts are reduced or can be reassigned to other tasks. This can greatly affect the overhead and factory burden in a manufacturing setting. One of the best examples of this is the outsourcing of Payroll and Human Resources that many companies have done to reduce their internal costs.
In Supply Chain scenarios like the outsourcing of assemblies, the third party now is more responsible for the quality of the component coming in and dealing with any quality issues in the supply chain. Less strain and manpower on your Quality department leads back to benefit #1.
Through outsourcing, a company can put more focus on its core competencies and work for better efficiency in their own processes. This is especially helpful during growth or expansion, when all hands are needed, and this leads to benefit #4.
With a non-core business process outsourced, management and core personnel can focus on new initiatives or work on LEAN, Six Sigma projects, etc.
JBE, Inc. specializes in outsourcing by providing quality Supply Chain Management Solutions. Our Assembly Services have helped our customers reduce their own internal costs and resources and allowed them time to focus their efforts on their core business. This is particularly true when we manage the Supply Chain for quality and cost, thereby reducing the number of touches a company’s staff has to make on suppliers.