The Top Pros and Cons of Inhouse Manufacturing

When you attempt to sell something to the potential consumers, the products has to be manufactured somewhere. In order to kick start business, many small and medium businesses choose to outsource their production needs. This may be a great choice to reduce the set-up and machinery expenses, but inhouse manufacturing may provide certain benefits. In this article, well discuss some pros and cons of manufacturing in-house.

Pros:

Low price per product

The biggest part about in-house production is that the price per product may be less than what you purchase from other manufacturers, which means you save more with each product sold to the potential customers. The calculation is simple – less production cost means more profit.

Quality control

When you manufacture products yourself and want to be sure of delivering quality to the buyers, you have the freedom to take control over the quality. Your in-house quality control team will have total assurance over the manufacturing process and product quality.

No logistics issues

Let’s say if you outsource your production process to other company, there may be many taxes applicable, especially if you’re outsourcing from other country and there are many logistics issues you can face, which is not the case with in-house manufacturing. The reason here is that the manufacturing is done in your country, under your particular laws.

Less management considerations

In comparison to outsourcing, in-house manufacturing process takes less administrative work to complete a manufacturing cycle. Instead of trying to outsource the manufacturing process, it’s easier to adjust the management roles whenever require to maximize quality and profit with in-house manufacturing.

Cons

Sales is must

With in-house manufacturing, you must ensure that the sales are being made to ensure more revenue. It is important because there are insurance costs, labour costs, utility costs and a lot more expenses evolved with in-house manufacturing unit operation. Without the sales, you have to bear these costs from your pocket and it turns impossible to stay into the business.

Changed administrative roles

With in-house manufacturing, you many have multiple roles to play and you may need human resources assistance to handle different aspects like benefit distribution, licensing requirements, worker’s comp claims, etc. you may also need to deal with local manufacturing rules and regulations, labour training, and other supervision requirements for assured quality control. After all, quality is the prime issue and requirement for every manufacturing business, which must be kept on the top priority.

Conclusion

Just like a coin, there are two different sides of manufacturing in-house and outsourcing. These pros and cons of manufacturing in-house show that it can be a cost and time saving opportunity, but it may also involve more involvement. Of course, the quality can be controlled, but your involvement and attention required also increases.