Manufacture Yourself or Outsource: Which is Best For Your Business?

Written by Chloe Harwood

If your business sells physical items, chances are you could save a whole lot of money in the long run by manufacturing them yourself. However not every business is in a position to do this, and if you’re smaller or a newer company, you’re probably outsourcing right now and having your products made by a third party. If you’re planning on setting up a plant and going ahead yourself, here are a few things to bear in mind.

How Much Money Do You Have to Spend Upfront?

One of the biggest considerations when it comes to setting up your own manufacturing plant is the cost. Unfortunately, there’s more to consider than just about the equipment and machinery. The premises can be a significant cost, especially as manufacturing plants tend to need to be somewhat large. You will need to think about the costs that come with hiring staff- advertising, recruiting, interviewing and training. Then there’s transportation, maintenance and repairs, even the oil to fuel your forklifts, vehicles and other machines. You can get gas oil drums delivered for this which works out cheaper since the duty is less on fuel for non-road driven vehicles. But it’s still a cost to bear in mind. Work out exactly how much you will need to spend to get your manufacturing plant started to see if it’s doable. For some small businesses, it just won’t be viable right now but perhaps could be something to aim for later on. If it is a cost you could cover, you could save yourself a lot of money long term over paying a company each month to make your products for you.

What Kind of Products Do You Manufacture?

Whether it’s worth setting up a manufacturing plant for your business largely depends on what it is you make. For example, if you need high-end machines, computers and other very expensive technology in order to create your products, then it might be cheaper and more practical to just outsource permanently. However, for other businesses, it’s more practical, for example, if you make clothes to sell you’ll need machinery and skilled sewers, but it’s a cost you could possibly cover. Even things like injection moulding machines for plastic products aren’t too expensive,

Have You Thought About Health and Safety?

When you’re running a manufacturing plant, there are lots of particular risks that you don’t get in many other workplaces that you will need to bear in mind. When your workers will be operating heavy machines, driving vehicles, using powerful equipment like drills and saws along with chemicals, heat and more there’s more chance of an accident occurring. Along with the risks you’d get in any workplace such as slips, trips and falls it can add up to a lot of possible issues. You need to follow health and safety laws closely, if not and someone is hurt you could end up with a costly lawsuit on your hands.

Would you ever consider setting up a manufacturing plant for your business, or would you prefer to leave it outsourced?

About the author

Chloe Harwood