Who Saves With Outsourced Manufacturing?
iPhones, computers, the clothes you wear, they’re all examples of outsourced manufacturing. Outsourcing the production of brands and labels to somewhere other than their owners’ facilities is done commonly, usually to save money.
Let’s face it, we all like to save money. Most of us NEED to. So, as a capitalist society, we will capitalize on the opportunities presented to us to save. The fact is that, still to this day, companies selling goods acquired through global sourcing, and companies that have their goods made by contract manufacturing overseas, are able to present their wares to consumers and other businesses at much lower cost. Keeping their cost of goods sold down, keeps money in the pockets and bank accounts of buyers of those goods.
Why Outsource Manufacturing?
Other than the obvious, aforementioned monetary reason, there are many strategic reasons for outsourcing manufacturing that despite some drawbacks have kept it a trend in manufacturing. Outsourcing is not only for manufacturing, but anything involving the contracting out of a business function or process whether it was previously performed in-house or not, to an external provider. Cost aside, another big reason companies farm out tasks, production, or processes to an external organization is because the tasks, production, or processes are not considered core business. Maintaining focus on the core business, one can run more lean and efficiently.
Domestic businesses and sometimes governments express their concern and it’s usually about jobs. Common feelings are that global sourcing and offshore manufacturing takes jobs away from the domestic land. Would other jobs be filled by those companies in the domestic land if they went out of business? No. Then there’d be no jobs. So, outsourcing manufacturing actually saves jobs.
There’s also the argument about taking advantage of under privileged nations’ cheap labor. Well, those nations are profiting greatly in business with the bigger countries, and they employ thousands of workers who otherwise would starve. Win-win. Manufacturing outsourcing is good for us and them. Us and them being large, wealthy countries and poorer countries.