When you first start out in the manufacturing business, you spend a long time figuring out what you’re going to sell. You focus on product development, market research, and other processes that help you to determine whether the idea you have is really worth selling and whether you can make a profit from it too.
Once you have your final idea and are ready to go ahead with the next steps, you may find that you come to a halt. So many of us spend so long thinking about creating our product that we don’t pay too much attention to how we’re going to create that product. This requires a manufacturing process, which will take raw materials or ingredients and combine them in a way that produces your final product that can then be packaged and shipped to customers.
Manufacturing, of course, is extremely complex in itself. Therefore, you’re going to want to make sure that you get the process right the first time around. Getting it right from the start means no wasted costs.
Here’s some information that will better inform you about this step in your business’ progression.
Your Manufacturing Business Options
When it comes to manufacturing, you usually have two broad options available to you. You can outsource your manufacturing to a third party, meaning that they provide the space, facilities, machinery, and workers required to produce your goods for an agreed cost.
The alternative is to manufacture in-house, which means investing in space, machinery, Metrology Parts, staff, and more to create the products yourself.
Outsourcing Manufacturing: The Pros and Cons
The vast majority of startups tend to outsource their manufacturing process. It is a lower cost, to begin with. You don’t need to invest in everything required to make your products, which tends to be favorable when you’re still testing the waters of whether your product will sell or not.
Therefore, you can outsource the manufacture of the first run of products and if they don’t sell, you can discontinue them. No need to worry about selling machinery or being tied into a contract on the premises you’re using for manufacturing.
Of course, when you outsource, you do leave quality control and time scales in someone else’s hands. You also have to pay an ongoing third-party cost to the manufacturer if you use them in the long run.
In-House Manufacturing: The Pros and Cons
In-house manufacturing gives you a lot more control over production, from time scales to quality. You also save money in the long run, as you don’t have to pay a middleman to do your production for you while generating a profit for themselves.
However, you do have to invest a lot to get up and running. This tends to be a preferable option for manufacturing businesses that have already established themselves.
Hence, they know there is an ongoing demand for their product. By producing it in-house, they will recoup costs on initial investments over a course of months or years.
Conclusion: Decisions of Manufacturing Business
Manufacturing is a process that all businesses will have to deal with if they sell products. So hopefully, some of the advice outlined above will help you to determine what path is best for your business!
Have you done manufacturing in-house or outsourced it? I’d love to hear from you about it in the comments below.