Outsourcing is used to put your company at a strategic advantage. Whether you’re a sales, service, or manufacturing business, outsourcing provides opportunities that allow you to focus on your core competencies.
SMEs, or small and medium sized enterprises, have been utilizing outsourcing more and more in recent years. In our fast-paced, online economy, it’s simpler than ever to connect with strategic third-party partners that can take your SME to the next level.
But what is outsourcing? And how can you use it to appropriately grow your business?
Outsourcing is the term used for subcontracting certain processes to individuals or third-party agencies.
First, it’s important to note that outsourcing does not necessarily mean offshoring. Sourcing offshore is a type of outsourcing that is done overseas. While this has grown in popularity in recent years, some SMEs are beginning to move away from offshoring business partners. Keeping processes in-nation is slightly more expensive, but it has proven fruitful for manufacturing, shipping, and transportation companies.
Manufacturing is central to the global economy. Since the Industrial Age, manufacturing has created value and opportunities for billions of individuals worldwide. But the definition of manufacturing has evolved and shaped since its early days. “Manufacturing jobs” used to refer primarily to that process of standing next to a conveyor belt in a factory.
Today, though, manufacturing has become more strategic, more consumer-centric, and more global. Because of this shift, outsourcing has proven to be a vital advantage to manufacturing companies that are bogged down by day-to-day operations—rather than focusing on overall strategy and execution. Outsourcing is growing rapidly to meet this need.
Manufacturing SMEs are generally focused on two things: reducing costs and growing quickly. Outsourcing is able to meet both needs in five key ways.
Outsourcing to a third-party cuts costs significantly by saving money on labor and overhead. Labor is one of the largest costs for manufacturing companies. Outsourcing can reduce the costs of salaries and benefits by removing the pressure of staffing. It can also help with overhead costs, such as reducing facility size and packaging expenses. This allows your SME to be leaner overall, which can boost your bottom line in the long-term.
Third-party companies also have industry-knowledge and efficient manufacturing processes in place that help you get the lowest prices.
Generally, third-party companies specialize in a given niche or industry. A third-party company functions within a single sphere, often specializing in few processes at which it’s especially strong. In this way, they have the expertise and the industry know-how to find the most efficient and cost-effective ways to deliver services.
Outsourcing also boosts productivity. Problems can go unaddressed or unnoticed in-house. When outsourcing, though, the third-party contractor is always working to ensure the most efficient processes are being used. If they aren’t at the top of their game, they will lose your business; thus, third-party companies are always looking to stay innovative at a high production capacity. This often gives you even higher quality provisions than if you were to do the same tasks in-house.
Often, SMEs are reluctant to outsource because they worry they’ll lose control and the process will become overly standardized. However, this misconception is generally false. Many third-party companies, like LTX Solutions, focus on supporting smaller businesses through customization efforts. These partners can modify their experience and resources to meet your needs and strategy.
Additionally, contractors generally deal with many different companies within the same industry (including your competitors). This means that they are consistently dealing with your market and your product. They understand your customization needs. Beyond that, they are also able to flexibly change in accordance with your industry’s market—because they have the products and resources for the entire industry on hand. Flexibility and innovation are necessary to meet demands in an ever-changing marketplace.
Outsourcing means you free up time and resources of your in-house team. This opens opportunities for your team to focus on vital tasks related to strategy and execution. You can focus on your core competencies and those areas that will help your company grow quickly and efficiently.
Many companies outsource their manufacturing and transportation because those are areas at which they are weak. They want to focus on sales or product development, so they’ll hire a proficient contractor to deliver this service in a quality way. This is where manufacturing SMEs step in to fill a critical role.
Outsourcing to a third-party is more than just getting rid of a process you don’t want to do. You are building a valuable partnership with another company. These partners can then introduce you to new marketplaces and networking opportunities. Partnerships are crucial to the successful implementation of a strategy.
For example, if you are a manufacturing company, you need a strong relationship with a transport company. They will be able to give you the strongest efficiencies, quality, price, and flexibility when shipping your goods. The better your relationship with them, the more they will do for your company—and your bottom line.
If you want to reap the benefits that come with outsourcing, you need to maintain strong relationships with your partners. Contracting out is common for manufacturing SMEs because it removes day-to-day task distractions and allows you to focus on following production trends of the market.
Reduced costs mixed with innovation, industry expertise, customization, flexibility, and new exposure—outsourcing to a third-party can become an invaluable partnership that will take your SME to new heights.
It’s time to consider outsourcing to LTX Solutions. We guarantee customization, efficiency, quality, technology, and customer service for your transportation processes. Most importantly, we want to get to know you and your business. We want a mutually beneficial relationship that will grow both our businesses for years to come. Contact us now to learn more about the advantages of partnering with LTX Solutions!