In today’s business climate, it’s more important than ever to cut costs where you can. Outsourcing your product manufacturing to other countries is such a smart move. Not only can you save on labor costs, but you can also take advantage of lower production costs and reduced shipping expenses. Here are five reasons why outsourcing your products from other countries is cost-efficient:
One of the biggest advantages of outsourcing your product manufacturing to other countries is the savings on labor costs. In China, for example, the average hourly manufacturing wage is just $3.56. Compare that to the projection in 2023 of $27.42 hourly manufacturing wage in the United States, and it’s easy to see why so many companies are choosing to outsource their product manufacturing overseas.
While outsourcing has been proven to cut costs, it will only be effective if done correctly. It would help if you took the time to research different countries and find one with a lower cost of living and does not have stringent labor laws. It would be best if you also looked into the hidden costs of outsourcing, such as the following:
In addition to lower labor costs, you’ll also benefit from lower production costs when you outsource your product manufacturing to other countries. This is because manufacturers in countries like India have access to cheaper raw materials and energy sources than their counterparts in developed nations. As a result, they can produce products at a fraction of the manufacturers’ cost in the West.
In addition to lower production costs, you can negotiate better terms with your suppliers. This is because they will be keen to secure your business and may offer discounts for volume orders. For example, you may get a 10% discount if you order 100,000 units from your supplier instead of 50,000 units. You can also use this opportunity to negotiate extended payment terms. This will give you more time to generate revenue from the sale of your products before you need to pay for the manufacturing costs.
Ease of Expanding to Other Countries
Expanding your business into new markets is easier when you outsource your product manufacturing to other countries. This is because you won’t need to set up a new production facility in each country where you want to sell your products. Instead, you can ship your products from the existing manufacturing facility to your customers in other countries. If you have partners in different countries, they can also help with the distribution and sale of your products.
If you have partners in Canada, they can help you with the sale of your products in the Canadian market. They can also help you with products that are not available in your country. For example, if you want to sell products in the Philippines, your partner can help you send package to Philippines from Canada without having to ship the product to your location and then send it to the Philippines, saving you a lot of time and money.
Outsourcing your product manufacturing to other countries also increases flexibility regarding production schedules. This is because manufacturers in Asia and other regions often have longer work weeks and fewer holidays than their counterparts in the West. As a result, they can get your products manufactured and shipped faster, which can be a major advantage when trying to meet tight deadlines.
For example, suppose you must get a product manufactured and shipped within two weeks. In that case, it may not be possible if you’re manufacturing in the United States. If you outsource your manufacturing to China, your product will likely be shipped on time. This is because Chinese manufacturers often work longer hours and have fewer holidays.
Access to New Markets and Talents
Outsourcing your product manufacturing to other countries also gives you access to new markets that could be very lucrative for your business. You can tap into new customer bases in Asia, Africa, and other regions that may be interested in your products but were inaccessible.
In addition, outsourcing your product manufacturing to other countries can create a more globalized brand image for your company. This can help you appeal to customers in different markets who are looking for products that are unique and not.
Utilizing third-party contractors also enables a company to tap into vast knowledge and experience, allowing them to release new products and services more rapidly. Outsourcing talents and services help to mitigate risks and provides access to a larger talent pool that the company may not have otherwise had.
In the End
By outsourcing your product manufacturing to other countries, you are being smart and looking for ways to cut costs, which will improve the company’s bottom line. If saving money is on your agenda for your next product launch, outsource offshore! You likely will be satisfied with what you find!