Why So Many American Businesses Choose to Outsource Production


Successfully running a business is all about making your customers happy and optimizing your company to improve profits. That’s a pretty straightforward concept introduced in any worthwhile Business 101 class. Unfortunately, knowing that those things are important and knowing how to make them a reality are two very different things.

At least as far as profit optimization goes, looking to the electronic manufacturing service industry can be a really smart choice. True, many worry that outsourcing their production to an electronic design and manufacturing firm will lead to poor consumer opinion. However, with reduced costs and improved quality of products, the benefits of contract manufacturing far outweigh the drawbacks.

Four Advantages of Contract Manufacturing for Electronics Companies

  1. Return Your Attention to Your Core Business
  2. As About.com writes, one of the biggest advantages of contract manufacturing is the ability to put your focus back on the core parts of your business — the things you do best. Manufacturing often draws attention away from customer service, human resources, and other essential cogs in the machine. By allowing contract manufacturers to take that weight off your shoulders, you can focus on making yours a better business.

  3. Variable Costs Equal Savings
  4. For The New York Times, the renewed ability to control capital costs makes for one of the biggest advantages of contract manufacturing. Consider, when you manufacture in house, you have to deal with a fixed cost — a big fixed cost. By outsourcing, that fixed cost becomes variable, able to be controlled based on your budgetary and production needs. In other words, you can drastically reduce your production costs when you outsource.

  5. Flexibility to Meet Demand
  6. As The Houston Chronicle suggests, contract manufacturing firms have enough staff, equipment, and materials to meet any sort of increased demand your company might have. On the other hand, if you manufacture in house, you’ll have to wait until you have the funds and the manpower to meet rising demand. You won’t have that problem when you outsource.

  7. Diversification Means a Stronger Business
  8. You no doubt realize that one of the biggest issues with trying to have your business do everything is that everything is interconnected. If something goes wrong with your production team, it will throw off your entire company, potentially plunging you into disastrous circumstances. That’s why SourcingMag.com recommends outsourcing. By outsourcing, you diversify risk, and that makes for a more stable business.

Has your company gained these many advantages of contract manufacturing? Let us know about your experiences with outsourcing production to electronic contract manufacturers in the comment section below. More can be found here.

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