Mass production: outsource or in house? How to reach the best quality in mass production
Best type of production in the smart manufacturing days
A company’s manufacturing process is definitely its bigger competitive advantage. Although today Smart manufacturing technologies can allow for key information about the manufacturing process to be available when it is needed, where it is needed, but still, where you place, and who’s responsible for your manufacturing is key to the structure of your supply chain. Regardless of the size of your production, besides getting educated about emerging technologies such as artificial intelligence, machine learning, and others so important to plan a successful production you need decide
which way you are going to choose. So should my company outsource our manufacturing or set up an in-house production? What are the main factors and advantages to consider each option?
- High initial investments on an in-house manufacturing
Building a factory, even if you’re not thing about a digital factory requires a high investment. Purchasing machinery for manufacturing and setting up a manufacturing line, that recruit and teams will need a budget that can cover all the steps. The complexity and large sums involved make many
companies to choose an outsourcing solution over this alternative.
- Labor costs
The cost of the employees that manage and run the manufacturing has a direct impact on the cost of the product. In the mass manufacturing world, the cost of labor for electronic products is probably about 20%-30% of the total product cost. For other types of products (wood, metal, plastic, textile), the cost of labor will probably be around 40%-60% of the total product cost.
Labor-saving is probably the number one reason for companies to decide to outsource and it’s likely that your manufacturing location will be one where wages are low.
- Material cost and its local availability
We live in a global market and material for manufacturing can be purchased from a variety of sources with different production quality. However, in many cases, the cost of material is heavily dependent on its availability at the location where manufacturing is to be carried out you’re your manufacturing is located next to vendors of your ‘bill of material’, the competitive market will maintain the price stainable or even reduce it from time to time and make sure you can rely on other sources in case it is needed.
- Location of the target market
When the target market is located in specific area (country, region, city, etc.) then potential transportation savings may outweigh the savings in labor and material costs to be gained by using an outsourced solution.
- Quantity Counts
As a rule of thumb, outsourcing is mostly relevant for mass production, i.e. hundreds or thousands of units per day. Unless there are other motivations such as target market location or government restrictions, there is very little sense in outsourcing for small quantities.
How to succeed with an outsourced production with a remote monitoring solution:
If an outsourced solution is chosen, you’ll need to make sure that the selected contract manufacturer can meet both your current and future capacity needs at the best production quality.
When you outsource, you can't keep an eye on your supplier unless you hire an on-site manager, or use a good remote monitoring solution as your ‘eyes overproduction’, that can be also combined with a local manager.
Hiring local companies to help supervise production quality is usually good for the final inspection of goods and before shipping them to clients. It is important to consider that those companies do not have the knowledge and the capacity to address issues related to the technology of the product and other more complex problems that may occur during production and that’s why smart manufacturing technologies should be combined with these options.
Quality control in manufacturing
Smart manufacturing technologies enhance the manufacturing process continuously collecting and analyzing your data in real-time to achieve and maintain quality performance.
Our clients report a 30% increase in quality and yield in the first year of use. Companies can Reduce downtime incidents and have an average of 4 months ROI (return on investment).
How does it work?
QualityLine automatically creates an analytics and interactive dashboarding system that automatically predicts and sends alerts for any anomaly detection to prevent degradation in the manufacturing process.
Our remote monitoring solutions let you gain full end-to-end transparency over the whole manufacturing cycle with accurate information about each unit tested. An automated root cause analysis will reduce manufacturing waste and minimize failure rate, improving your production efficiency and quality.
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