Outsourcing vs in-house

Supplier: Anchorage
30 October, 2013

Whilst we are a few years on from the GFC, many businesses, both small and large are finding the world of business has changed dramatically and permanently and it is more difficult to secure sales and ultimately a profit.

This is especially so in manufacturing industries across Australia.

With over 20 years of manufacturing experience, Greg Haak from Swift Metals believes "we have found that businesses that are succeeding and getting ahead have taken a rational approach to the traditional ideology that; producing as much as possible in-house is cheaper."

Haak also notes: "a closer look at the hidden costs of production reveals that in-house production can be grossly inefficient, we find that more and more companies are outsourcing locally, with benefits effective immediately."

Consider the following:

  • Contract manufacturing companies are designed to be efficient – they invest in cutting-edge technology and this technology can benefit you in terms of time and money.
  • Fixed costs – your manufacturing costs become predictable and hidden costs such as scrap and re-work costs are avoided.
  • Staff flexibility – your staff are now available for other activities such as final assembly, R&D or marketing.
  • Lead times – outsourcing takes the pressure off your team, and components are there as you need them.
  • Inventory – lower overhead cost due to less stock on the floor.
  • You are no longer reliant on skilled staff – a costly resource that can be difficult to sustain for the long term.

The automotive industry is a classic example of where components, parts and finished assemblies are continually outsourced from in-house production to smaller, leaner operators who often produce the same or similar parts for multiple manufacturers. Obviously higher production volumes and increased buying power leads to improved quality and reduced costs.

The attached photos show a small range of the services that Swift Metal Services provides to other manufacturers.

To read more about component costs please click here