The Benefits of Using Sourcing Companies Overseas
Outsourcing has gotten a bad rap lately. Recent political disputes have got Americans wondering whether too many products are being sourced overseas.
In reality, however, using overseas sourcing companies is a great way to reduce costs. These savings can then make consumer products more affordable.
When consumers can afford more, they spend more money. This helps lead to a healthier economy.
Not to mention, reducing your manufacturing costs will help your company increase its profit margins. You can then reinvest this revenue back into your business, and continue expanding.
Let's take a closer look at the ways sourcing companies can help your business, and how you can start manufacturing overseas.
Benefits of Outsourcing
You've probably heard that outsourcing can save your company money. This is certainly true, but it's not the only benefit to outsourcing. Let's take a closer look.
Why In-House Manufacturing Isn't Always Best
We've all heard the saying, "If you want something done right, you have to do it yourself." This sentiment leads many companies to assume that in-house manufacturing is the only way to ensure quality.
In reality, the idea that in-house manufacturing is easier and more efficient is mostly a myth.
Sourcing companies have dedicated facilities, and have determined the most cost-effective ways to manufacture products. Because of this, they have the capacity to produce quickly and at a lower a cost.
Outsourcing your manufacturing needs to experts improves efficiency. Simply put, there's no need for your company to reinvent the wheel--or to manufacture it.
Saving on Labor and Overhead
For many companies, labor is one of their most significant costs. Overhead costs like rent, electricity, and other utilities are another large expense.
Lower costs overseas can help reduce these expenses for your company. For instance, countries like China have lower labor costs, because the labor force is not unionized.
Additionally, rental costs tend to be cheaper overseas as well. The taxes for manufacturing your product abroad will also be much lower.
Of course, you want to be careful not to outsource to manufacturers who mistreat their workers. This is why it's important to go through a sourcing company, who will handle that logistical work for you. But we'll talk about that later in the article.
Using Nearby Resources
For many products sold in America, the raw materials needed to produce them are difficult to access domestically. Oftentimes, these materials are more abundant and less expensive abroad.
If you choose to manufacture at a facility abroad, it will be less expensive to transport the needed materials there. This is another cost-saving measure.
Raw materials aren't the only resource that can be easier to find abroad. In some cases, other countries have more workers with the particular skills you might need to manufacture your product.
Focusing on What's Important
When you allow manufacturing experts to work on production, that frees up your time to address your company's other needs. You will be able to focus on core areas like building your brand and improving sales, instead of the details of making a product.
Also, the money you save on manufacturing can be invested in other aspects of your business. For instance, you could use the extra revenue to hire additional sales or marketing staff.
This is one of the ways outsourcing actually helps improve the US economy and create American jobs. It's important to note that these jobs also tend to be higher-paying than manufacturing jobs. In other words, by saving on manufacturing, your company can afford to create better jobs for Americans.
How Sourcing Companies Can Help
Of course, while there are many benefits of manufacturing your products abroad, there are also several challenges. Because sourcing companies have expertise with outsourcing, they can be a great resource.
Sourcing companies specialize in connecting businesses with resources they need to save money on production. Their relationships and experiences will make your outsourcing efforts more successful.
When you start looking into outsourcing, you might be overwhelmed by all of the options. There are many countries where you can outsource. Furthermore, each of those countries has several factories.
Sourcing companies already have experience working with factories in several different countries. Because they have already done this legwork, they can connect you with the best options available to you.
By working with a sourcing company, you can be confident that you'll be using a trustworthy manufacturer.
Finding the Right Fit
There are some products that require you to outsource to certain countries. For instance, a particular country might have more access to a particular resource, or to employees with a certain skill.
When you work with a sourcing company, you'll be able to tell them what you need to make your product. You can also outline a budget of what you're looking to spend. The sourcing company can then connect you with options that best meet your specific needs.
One of the challenges with outsourcing is that it is difficult to have oversight. If you manufacture your product at a company down the street, it's easy to stop by and see how things are going. The same isn't true if your manufacturing plant is in Taiwan.
A sourcing company can take care of checking in on and overseeing operations for you. This reduces the time you have to spend worrying about how the process is going.
Language and Cultural Barriers
Additionally, there can be language and cultural barriers when outsourcing. If you are not familiar with the country you've outsourced to, you might have difficulty communicating your exact needs and expectations.
Sourcing companies already have relationships with manufacturers. This allows them to work as a liaison for you, and make sure your needs are met.
Also, sourcing companies often have employees who have experience with different cultures. This helps facilitate the relationship with overseas manufacturers.
If you'd like more information about how to use sourcing companies for your business, contact us. We'll work with you to discuss and identify the right Manufacturing Solutions for your company.
If you're a purchasing manager who is looking to keep your costs low, using sourcing companies from overseas may be an excellent option. Learn more.