Outsourcing your product to other locations rather than your factories could be troublesome, however, it is never safe to say that will not happen to your business. Especially during this Covid 19 pandemic, while businesses are suffering due to lack of resources and the material price is getting higher over time. These are 6 signs that show you it is high time for your company to outsource.
The symptoms that tell your business need outsourcing
Production cost needed to be reduced.
You need to pay more time focus on renovating your core business rather than experiencing headache from production
Your capacity is not quite up to customer's demand
You have issues improving quality
Your business is limited in term of talents and skills workforce
It is just simply critical to your business at the moment
For access to intellectual capital
To manage business environment
To drive transformation change
These above are the most common reason and cause for outsourcing, which is highlighted by Deloitte. As you can see, there are many different reasons why companies outsource. In many cases, there is no single reason why outsourcing makes sense. Many different reasons might apply based on where a business is in its growth. In many cases, it might be a combination of factors – skill and cost, or capacity and time to market. One fact is clear, though – outsourcing, when done right, can help companies become significantly more efficient. Let’s now illustrate the reasons to outsource with outsourcing examples.
Outsourcing successful stories from Market leaders
Apple
Apple’s unique relationship with the Chinese manufacturing firm Foxconn is no secret to the world. Without this partnership, there’s a good chance the company wouldn’t be able to sell its products like iPhones, iPads, and Macbook computers at such a reasonable price. According to an article from 9 To 5 Mac, Foxconn recently broke new ground on its first plant in the United States. The Wisconsin factory has been estimated to cost close to 10 billion dollars with the hopes of filling thousands of jobs.
Walmart
A majority of Walmart’s goods are manufactured overseas in China. With more than 10,000 suppliers in China manufacturing for Walmart, the company eventually moved its global outsourcing headquarters from Hong Kong to a Chinese city called Shenzhen in 2002. In 2013, Walmart’s Chinese imports from overseas totalled a whopping 49 billion dollars.
TOSHIBA
This company came into place when Shibaura Engineering Works and Tokyo Electric merged in 1939.
Shibaura was known as one of the very first ODM of telegraph equipment and electrical machinery which made it a leader in industrial power globally.
Tokyo Electric was majorly focused on electric lamps.
Toshiba later acquired OCZ Technology, which gave it a boost in its expansion, its innovation and development have made it improve continually. It had an annual sales revenue of $44.28 billion in 2018.
Many Toshiba products, such as flash drives, T.Vs, keyboards, and surveillance cameras are made by Chinese manufacturers.
HP
The company was established by William Bill and David Packard. From 2007 to 2014 it was the leading manufacturer in PC, however, it was overtaken by Lenovo.
The company focuses on printers, computing devices, software services, among others.
Most of HP’s laptop components are manufactured within the China manufacturing ecosystem, other components are made in Thailand, Malaysia, and the Philippines.
The assembly process might either take place in the USA or China, depending on which market the final product will be sold. Its annual sales revenue in 2018 was $58.5 billion.
SAMSUNG
In terms of the phone segment, its market is generally good. Since it acquired Hanguk Jeonja Tongsana telecommunications, there was a boost in its growth.
It has also turned out to be a major microchip producer and ceased outsourcing from other companies. Later, it released the first Liquid Crystal Display screen which changed the television world.
It continued releasing even sleeker televisions which became the best of many. Its annual sales revenue in 2018 was $219.34 billion.
50% of Samsung mobile phones are made in Vietnam.
At present, Samsung has six mobile phone manufacturing facilities in six countries, Vietnam, China, India, Brazil, Indonesia, and Korea. The two plants in Vietnam have a combined annual production capacity of 270 million units.
Outsourcing to China in 2021, how to start from scratch?
Glad you ask, we already had numerous articles covering this colossal question, feel free to spend your time looking at these articles below. Happy outsourcing!
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Everything you need to know when outsourcing your fabricated parts to China in 2021 What are the benefits of outsourcing manufacturing to China? How risky is outsourcing your manufacturing to China?