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The Case for Outsourcing: Business Benefits

Mention electronics contract manufacturing or outsourcing and the picture that immediately comes to mind is manufacturing that is being done by another company for a unit price. Some view this relationship as being similar to relationships with other purchased part suppliers. An original equipment manufacturer (OEM) sends out a quote package with specifications and the bidder offering the lowest total cost wins. However, there is more complexity in the electronics contract manufacturing relationship than is typically found in other supply chain relationships. While quoted price represents a measurable cost, outsourcing drives several lesser measured business benefits. When fully exploited, each of these benefits helps lower cost through improved efficiency, risk mitigation or better resource utilization.

These benefits include:
  • Access to a wider pool of expertise
  • Shortened product development cycles
  • Improved financial turns
  • Reduced internal transactions
  • Better resource utilization
  • Ability to manufacture in lower cost or more logistically beneficial labor regions with minimal investment risk.
This whitepaper looks at each of these benefits and discusses ways to focus contract manufacturing partner selection and relationship framework to better take advantage of these benefits. Examples from some of SigmaTron International’s customer relationships are used, where applicable.



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SigmaTron International

http://www.sigmatronintl.com
E: [email protected]
T: (510) 477-5004
F: (510) 477-5001

Address
30000 Eigenbrodt Way, Union City, CA, 94587, United States
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