According to research from Plunkett Research, Ltd., outsourced manufacturing services and other off-shoring activity will grow into a nearly $565.0 billion industry globally in 2017. Already, successful global corporations like Apple and Nike, spent upwards of $400 billion in 2016 on contract manufacturing.So, the question arises: What do these companies seek to achieve from contracting their traditionally in-house services? Beyond Cost and Operational EfficienciesOutsourced manufacturing companies offer opportunities that go much beyond mere cost savings and operational efficiencies. A 2016 outsourcing survey by Deloitte confirmed this as well. According to the surveys’ authors:“…today’s leading companies are approaching outsourcing in innovative ways to activate, create, integrate, and amplify business value.”More specifically:
Making It WorkClearly outsourcing of some in-house manufacturing and distribution operations can bring tremendous synergies to bear between manufacturing partners. However, to make it work you need to ensure there are formal structures in place between your company and your contract manufacturing provider. For your operations team to reap the full benefit of such relationships, you must set out clear objectives for what needs to be accomplished, and define precise metrics against which performance will be measured. Additionally, you must build one thing that many partnerships fail to put in place: Dispute resolution processes. While partnerships may be built on trust and expectation of mutual benefit, disputes will arise at some point. When they do, your operations team will be well served if a reliable dispute resolution mechanism is already in place.
As your warehouse operations expand, the challenges also grow in scope. An innovative approach improves both inventory management and overall efficiency.
As supply chain complexity grows alongside labor and transportation costs, an experienced warehouse 3PL can help you realize significant efficiency gains.
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