Various bottlenecks around the world have led to a protracted supply chain crisis. In the past, outsourcing manufacturing was a no-brainer, but now things are less clear.
So what kind of things does your company need to think about regarding outsourcing manufacturing? This guide tells you a few things you need to consider.
Ownership of Intellectual Property
While outsourcing your manufacturing overseas may save your company money, it could cause problems. For example, you may have difficulties enforcing your intellectual property rights. If you outsource manufacturing of a patented design to a domestic company, you can take them to court if they produce that design for someone else.
On the other hand, this might not be possible if you’re working with a company from overseas. If you want to outsource production, make sure you get legal advice first.
The recent supply chain crisis has shown outsourcing manufacturing can be risky. Before outsourcing any part of your manufacturing process, you’ll need to do a risk analysis. For example, how long can you continue producing if the supply chain shuts down?
In some cases, it might make more sense to spend more money on manufacturing parts in-house. While this may cost more, it exposes you to less risk.
It may make sense to work with a consultant who is knowledgeable about the country you want to outsource to. This might reveal potential risks you hadn’t considered. You can find more information here about how the crisis has changed the outsourcing industry.
During the supply chain crisis, many overseas manufacturing companies have proven themselves unreliable. For example, some companies made promises about production capacity they simply couldn’t deliver on.
Before working with a new outsourced manufacturing company, ask around about their reputation. You should talk to your industry contacts and see what kind of reputation the company has. You should be skeptical about any information you find online, as this isn’t always reliable.
Always try to get information about a company through trusted people in your industry network.
The supply chain crisis means that your production capacity may change. For example, if a certain part or material gets more expensive, you might need to lower your production numbers. On the other hand, if the crisis starts to stabilize, you might be able to manufacture more.
This means you should work with outsourced companies that are flexible with their production numbers.
Take Care With Outsourcing Manufacturing
As you can see, the ongoing supply chain crisis has made outsourcing manufacturing a more risky prospect. You’ll need to take the time to do a thorough risk analysis. You’ll also need to make sure you work with a flexible company that has maintained an excellent reputation throughout the crisis.
If you want to learn more about some other business-related topics, check out the rest of our blog posts.