Overseas Manufacturing Pros and Cons

In the last few decades, Overseas manufacturing has gained popularity all over the world irrespective of its pros and cons.

Why is it cheaper to manufacture overseas?

Several small, medium & large corporations are now opting to manufacture overseas their products. There are so many reasons behind this. A lot of benefits are achievable if a business owner processes the manufacturing of goods from offshore rather than doing the manufacturing domestic or in the backyard. Take your business & products to a higher level of growth with overseas manufacturing. Here are 5 reasons you may consider –

  1. Lower costs on Production

A business owner takes this sensible decision of cutting cost but at the same time does not accept low-quality standards. Any manufacturing business requires raw material for its final product, additionally, they look out for cheap labour but skilled labour force. All these factors can reduce the total cost of the product with quality. So, if you have overseas manufacturing that has all these production factors available. Go ahead!

  1. Lower Tooling Cost

There are certain production tools available at very cheap costs overseas as compared to domestic rates (depending on your product) such as Injection moulds, production fixtures & die-cast moulds. If these tools are comparatively inexpensive & available in a foreign market. You can easily calculate how much cost you can save on the manufacturing of final goods. Hence, it achieves profitability.

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  1. Mass or Bulk Production

So, demand & supply chain management needs to be fulfilled regularly. Manufacturing is always profitable in such cases where large volumes are produced. Therefore, bulk production always leads to cost reductions on final goods and sells at good prices because of outrageous demands. So, you can get a good margin in mass productions.

  1. Scalability and Flexibility (Overseas Manufacturing Pros and Cons)

If your overseas manufacturing unit has the scalability & flexibility options, you can easily meet the dynamic changing demands of the market. For instance, when the demand increases, you can quickly hire a few more skilled labourers as the overseas unit has a similar market going on. So, it’s easier to hire a new labour force in less time. You can make sure that your unit remains flexible in changing demands.

  1. Time-Saving & Stress-free

You can easily focus on all other areas of your business line if you opt to manufacture with a dedicated & professional manufacturing unit overseas. You can take on other responsibilities easily to expand your business vertical. Therefore, you can put all your brains into planning product marketing & its promotions in a very relaxed way. You will have ample time to break new deals. With this decision, you can make your stakeholders thrilled as you have hired a competent team who are handling the manufacturing issues. Win-win situation!

What are the advantages and disadvantages of outsourcing?

Overseas manufacturing pros and cons

Whenever any manufacturing business relocates or hires employees from outside and does not employ in-house for any of its services such as production, product development, maintenance, quality check or any associated tasks then the process of hiring from outside is known as ‘Outsourcing’. In simple terms, you are hiring a resource from outside the company for you to provide some dedicated tasks to accomplish your business objectives.

Advantage of Outsourcing: Lower Costs

  1. Cheaper rent for factories and their workers.
  2. No maintenance cost.
  3. Costs on raw materials & labours are affordable.
  4. Can get multiple services beyond production such as shipment & storage.
  5. Charges applicable only for the space used or on services.
  6. Lower tariff rates and excise duties.
  7. Access to local markets for selling/redistribution.

Advantage of Outsourcing: Skilled Workforce

  1. Outsourced labour is technically skilled.
  2. Labourers are highly educated.
  3. An environment of multilingual support workers adds an advantage of responding to customers globally.
  4. Appreciation in local market promotion as more job opportunities is created by your company.
  5. Get contract workers as per market demands & fluctuations.

The disadvantage of Outsourcing: Economic Security

  1. Bribery & corruption.
  2. No regular participation in filling in duties & responsibilities.
  3. The legal risk for companies if break country clauses.
  4. Hindrance to economic security.
  5. Theft on raw materials or shipping of final goods.
  6. Crime, terrorism attacks or political instabilities.
  7. Fraudulent activities.

The disadvantage of Outsourcing: Control Concerns

  1. No daily control of remote contractors.
  2. No quality control.
  3. Misleading job opportunities ruining the reputation of the company.
  4. Miss on quality local vendors because of a lag in communication channels.

What are the limitations in manufacturing?

Well, of course, there are some limitations in the manufacturing industry that can make it a nightmare for any business owner if not handled wisely. Here, we have drafted a few points for you to understand and be ready if you are going to be a part of the manufacturing business.

  1. No Control & Supervision problems: (Overseas Manufacturing Pros and Cons)

Theft & wastage of resources is possible outcomes of ineffective supervision. There are many operations, a large workforce, & a good amount of large scale production with raw material. If all are not supervised timely, it will lead to huge losses

  1. No customer contact & Customization issues:

Manufacturing always works on mass production & bulk orders. Therefore, there are no customisations available. Hence, you cannot personalise products based on customer demand that can lead to the conversion of loyal customers to move to another brand in search of personal touch.

  1. Flexibility issues:

The production of goods has specific production tools for the manufacturing of single types of products only. If the market trends changes, the manufacturing unit suffers a great loss as they cannot switch easily & adopt the fast-paced changes happening in the market due to heavy machinery costs & unskilled labour on new technology. For example, the metal industry had to close when the plastic industry outgrew a few years back.

Therefore, there are so many risk factors involved in the manufacturing industry that leads to its limitations.

With this, we hope that you have got some vital information for the manufacturing industry & its overseas business trend along with details on outsourcing trends. This is all about Overseas Manufacturing Pros and Cons.

Comment in the box below your thoughts on the manufacturing industry.

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