When outsourcing is discussed, the conversation often centers on its benefits in terms of labor cost reduction. The reality is that labor cost reduction is often only the tip of the iceberg in terms of outsourcing benefits. That said, there are differences in contract manufacturing breadth of outsourcing solution, geographic reach and internal resources that may limit some of these benefits. Consequently, it is important to determine the goals of an outsourcing strategy before beginning a search for the optimum supplier. Three goals often overlooked in this strategy development are redundancy in manufacturing capability for risk mitigation, the ability to free internal manufacturing space for newer products and the ability to scale up manufacturing volumes without adding internal capacity. This whitepaper looks at the benefits of these strategies in detail and their impact on supplier selection.
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