Outsourcing is majorly done for the convenience that a company gets and also helps it to focus on other vital areas. Outsourcing the manufacturing of a product for small and mid-size companies which are short on financial grounds compared to giant manufacturers is like a blessing. At the same time they also have to face greater challenges for it.
There are ample of companies which have outsourced their manufacturing and are enjoying a great success and if done properly, it can lead to phenomenal savings on expenditure.
If you’re a small time company looking to outsource manufacturing department, this article here will let you know the challenges that you may face and their solutions to avoid any upcoming shortfalls.
Choosing the correct Contract Manufacturer
Selecting an appropriate contract manufacturer doesn’t only involve their type of work, price or quality it also depends on factors like their geographic location, their strategies, the ease of transport that is possible and other managerial skills.
Mark short and long-term goal of yours with the manufacturer. This will help in forecasting goals of yours. This entire if settled on a fair price will be a big hurdle crossed. Keep your business proportion according to the manufacturer’s revenue to avoid any losses. Too low proportion of work from them will make them reluctant towards you.
Firstly, make sure that the forecasting you do is practically correct and is viable. It should be suitable enough for the manufacturer to gain out revenue. Take time to understand your sales and interaction with your consumers, which will help you to make the sales forecast chart of yours. Evaluate your demand and supply smartly to create your forecasting report.
Reduce your inventory liabilities
In OEM and CM relationship, each tries to pass on its inventory liability to each other and this may create constant clashes between them and they many times get charged excessive in inventory.
Clarify each and every point, especially liabilities of any parts in the beginning of the relationship. Clarify all the points on liability to ensure avoidance of such circumstances. Also sort out minimum order quantities and sizes.
The competition in the market is at its peak and a product of low quality, especially from a newly emerged brand will make no one fancy their product. New companies generally face a hard time convincing customers about their brand and product quality.
Discuss your plans thorough with your CM and be clear of the defects that technically arises or of any faulty product. Monitor the manufacturing process or appoint officers for quality inspection if there aren’t in the CM’s firm. Minimize the failure rates.
Getting the correct team to work
Many times the companies aren’t impressed with the team assigned to them for doing their work in a CM. This leads to improper communication and lack of interest in working with each other.
While the CM may not assign its best team on your assignment, you should know where you require the right amount of attention in the production and can employ your own personnel in the process to ensure the proper outcome. Establish a strong relation with the CM to facilitate the workflow and avoid any mismatched opinions.