To make or to buy—that is the question. Outsourcing elements of a supply chain is becoming an important consideration for electronics and bio-production companies. Historically, it’s a good way to minimize operational risk when markets are rapidly changing and the product life cycle is shortening. The shortest life cycles are emerging where fast-changing technology is involved, such as laptops, MP3 players, and mobile phones. But even with products that are produced on a slower pace such as industrial electronics, companies have found some benefits to bringing in different parties through the product development life cycle.
But there are positives and negatives to either choice.
Why You Should Consider Outsourcing Your Supply Chain
One obvious reason to consider outsourcing your supply chain is that it gives you one less thing to worry about. When the strategic details of every little detail are off your plate, you can focus on the bigger picture of your product and find opportunities to grow your business. However, there are additional benefits to outsourcing that are not as apparent, such as:
Scalability: An external partner can provide insights about forecasting, inventory, integration, and end of life that specifically affect the components they supply. Additionally, they may have the capacity to be flexible during periods of capacity constraints. This can often help you increase your cost efficiency.
Compliance: When a company specializes in electronics component procurement, they will be well-familiar with meeting the requirements or certifications necessary, including being vigilant about counterfeit parts. One less thing for you to worry about.
Lower Overhead: By outsourcing strategic elements of your supply chain, you can reduce the capital and overhead expenses associated with staffing, inventory, storage, etc.
Drawbacks to Outsourcing Your Supply Chain
The electronics manufacturing services provider you choose can make or break your business. It’s a big deal. You will need to ensure your electronics manufacturing services supplier has a solid reputation and has the flexibility to adapt to any changes to your design that are needed—as changes are often needed.
Consolidation: In today’s markets, many PCB assembly companies are merging or acquiring each other. This means your components may no longer be a focus, or may stop being available altogether.
Double Outsourcing: In some cases, electronics manufacturers will outsource components from other countries to make extra profit—exposing your supply chain to counterfeit or non-compliant components.
Keeping Current: Knowing what the regulations are when it comes to every component of your product helps to keep you and your company in compliance. The rules constantly change so it’s important to stay abreast of current and proposed legislation that could impact your supply chain, especially if it’s not in your control.
Questions to Consider if You Outsource
If you do decide to outsource your supply chain, here are five questions you should make sure you ask your potential suppliers:
- How are your suppliers selected?
- How do you approach procurement?
- What do you do to keep current with rules, regulations, and compliance?
- What do you do to ensure quality products?
- How do you avoid obsolescence?
Meeting Your Needs
ACDi offers full product lifecycle management solutions. From procurement and assembly to complete end-user order fulfillment, ACDi offers industry experts who can provide solutions to most product challenges you face. We don’t just build your product, we look at every level of development to help you maximize efficiency, resulting in a better and more reliable product.