Why Outsource Manufacturing to Asia?
In the past few decades, there has been a growing trend in outsourcing manufacturing to Asia, especially China and Taiwan. Not only does the US outsource their manufacturing, but many countries around the world outsource their manufacturing to Asia as well.
Why is this trend growing? Why do companies continue to outsource? There are plenty of advantages for organizations when they choose to outsource their manufacturing. Below are a few of the top advantages.
Cost Saving:
Outsourcing helps companies save on cost by eliminating their overhead costs in terms of labor, land, insurance, utilities and maintenance. In addition, certain governments in Asia support factories and investments with tax breaks, subsidies and extra catered services to lower costs, adding additional savings to your production.
Quality Customer Service:
Asian manufacturers aim to please their customers, keeping their best interest in mind. Manufacturers are keen on communication flow in order to achieve the best results possible, eliminating errors that can potentially affect the outcome of the manufactured goods. Asian manufacturers are known to produce high quality products exactly as specified with prompt delivery, making it an acceptable substitute to manufactured goods in the US.
Higher Yield, Faster Output:
Asian factories have the capability to yield higher output with fast turnaround times due to their larger factories and extensive workforce. Factories have state of the art manufacturing equipment and are able to operate for longer hours compared to their American counterpart, allowing room for faster and higher yields. These capabilities allow factories to meet their deliverable deadlines, nothing is more frustrating than missing an important deadline.
Flexibility:
Asian factories can offer a better response rate to your market's demand changes, allowing you to take control over your production demands whether you need to scale the manufacturing up or down. Minimum Order Quantity (MOQ) can vary in every manufacturer, however, many are willing to work with their customer's demands in order to establish and maintain a healthy working relationship.
Focus On Core Competency:
Outsourcing helps organizations focus on their core competency by removing the burden of manufacturing their own products. Asian manufacturers have extensive knowledge and experience from being in the manufacturing industry for such a long time. Many offering value-added services such as complementary engineering expertise for further product development and supply management sourcing for readily available materials, making them the “extra hands and arms” of the organization. These added services allow organizations to allocate unnecessary expenses to their core competencies such as R&D and marketing.
Of course we didn't get to cover all of the advantages of outsourcing manufacturing to Asia, but hopefully the key advantages listed above has helped explain why organizations favor to do so. Remember to do your own research on the different capabilities each manufacturer has highlighting the ones that are the most important to your business.