The manufacturing industry plays a key role in today’s world and impacts several sectors, like retail, transportation, food, and energy. Since manufacturing is an industry that requires skill, labour, and machinery, companies often opt for outsourced manufacturing.
A small business, for instance, may not have the capacity to manufacture their own products and may instead find it more financially viable to outsource their manufacturing. There four key factors to consider when doing this and these are labour costs, overhead costs, flexibility, and focus.
Employing a workforce to manufacture a product is not cheap and reduced labour is one of the key reasons people opt to outsource their manufacturing. Overhead costs of an organisation also reduce dramatically when they outsource manufacturing as there are no maintenance or utility costs involved unlike when manufacturing is done in-house.
With regard to focus, an organisation must consider if maintaining an area of manufacturing is central to the company mission. The final factor to consider is flexibility, which looks at if capital and equipment can be refocused instead of manufacturing being outsourced.
Having considered these factors, you may opt to outsource manufacturing for its various benefits. Besides reduced costs, outsourcing your manufacturing also means boosting innovation, increasing efficiency, and scalability.
While outsourced manufacturing can benefit companies greatly, there are several risks involved in outsourced manufacturing. These include choosing to outsource manufacturing before adequately calculating the cost of outsourced manufacturing or identifying the process of transition, creating a gap in communication by not providing detailed and documented specifications, and not having a flexible, realistic, or practical production timeline.
Quality and quantity are other risks associated with outsourced manufacturing, with a failure to find quality providers and vendors being one of the biggest concerns companies have. Companies may also not consider if the vendor has the capacity to scale production as necessary and this too, is a risk of outsourced manufacturing.
These risks, however, can be eliminated to a considerable extent with the use of software like enterprise resource planning or ERP. A cloud ERP system, like the one by NetSuite, allows organisations to track and monitor their manufacturing processes. Like NetSuite’s cloud CRM solution, NetSuite ERP also takes into consideration different types of businesses, like startups, fast-growing businesses, and family owned businesses, as well as different industry types. Thus, NetSuite ERP, NetSuite CRM+, and other products cater to a range of industries, whether it is advertising, apparel, healthcare, logistics, energy or education.
In terms of their manufacturing ERP software, which minimises the risks of outsourced manufacturing, product features include customer relationship management or CRM. The tool has powerful CRM capabilities that can strengthen customer relationships and drive the complete customer lifecycle, from lead to opportunity, sales order, fulfilment, renewal, upsell, cross-sell, and support.
According to NetSuite, the cloud CRM solution delivers a real-time 360-degree view of the customer with a seamless flow of information and includes powerful sales performance management, order management, and partner management.
Product data management is another feature of NetSuite’s ERP software for manufacturing. With this tool, an organisation can manage all their product data in one place, reduce the time to market for new products, and simplify the design process. The tool also has extended capabilities for inventory control tracking, planning, and costing of items in project-controlled environments as well as flexibility in costing by supporting comprehensive inventory costing methods.
Another feature that makes NetSuite the right software to minimise the risks of outsourced manufacturing is the Intelligent Order Management tool which automates order promising, allocation, orchestration, and execution processes.
An organisation can also automatically balance demand and supply and ensure they have inventory in the right place at the right time with the planning and scheduling tool, while NetSuite’s procurement tool manages vendors and purchasing processes.
With the NetSuite ERP software for manufacturing, an organisation can also create, release, update, and monitor work orders throughout the production process as well as easily control and monitor their outsourced manufacturing processes.
With an interactive tablet app, NetSuite also allows users to get real-time updates from the shop floor and quality management tools allow users to define inspection plans and pass/fail criteria, collect results, and monitor in real time.
These features are essential to a business looking to minimise the risks of outsourced manufacturing through the right software and NetSuite’s enterprise resource planning solution for the manufacturing industry is definitely worth considering in this regard.