Advantages and Disadvantages of Sourcing in Manufacturing

7/27/20 10:30 AM

In manufacturing, you may be wondering what route is the absolute best for your operation in terms of obtaining parts and materials. This could be attempting to produce them in-house, or more commonly, locating a supplier and company to source from that can take care of this need.

Advantages and Disadvantages of Sourcing in Manufacturing

Within sourcing, there are many various advantages and disadvantages that need to be understood when deciding on which route to take. Whether you are attempting to decide on a company, country, or particular material that you are looking into, understanding the advantages and disadvantages pertaining to these concepts is an absolute must. Therefore, here we are going to discuss the advantages and disadvantages of sourcing in manufacturing.

Advantages of Sourcing in Manufacturing

There are many advantages to understanding the importance of sourcing and how it may benefit your manufacturing operation. The advantages of sourcing in manufacturing pertain to the following:

  • Cheap Manpower ­– By far one of the most commonly discussed aspects pertaining to sourcing, outsourcing through transnational companies has been an extremely important force in globalization. Profit-seeking companies will move their operations overseas in order to obtain a comparative and competitive advantage. These lowered cost will ultimately reduce the cost of production, thus leading to price and service reduction, leading to an increase in consumers.
  • Scalability ­– Whether there is a next generation product or a company is seeking to upgrade an existing product, sourcing locally or globally is an exceptional idea. Sourcing allows you to develop a team that can test solutions of any magnitude and branch into various solutions. This can lead to projects and once they are accomplished, the team can be dispersed.
  • Accessibility – Raw materials can be difficult to obtain, especially if they are not within the country that you are producing the product. This is where sourcing can also be particularly beneficial, simply due to the fact that sourcing internationally allows you to have access to those materials on a frequent basis. Economies of scale may also reduce prices due to the material being cheaper in another area within the world, and thus lead to increased consumer intake.

Disadvantages of Sourcing in Manufacturing

While there are many advantages of sourcing, there are a series of disadvantages as well that may hinder your operation. Disadvantages pertain to the following:

  • Quality Loss ­– While raw materials and parts may be cheaper, this could also lead to a loss in quality. Sourcing companies are stimulated by profit and due to fixed contracts, the profit will therefore be reduced through production cost reduction. This is important to understand when choosing cheap labor and materials when going into a fixed contract – ultimately due to the fact that they will alter production to make more money.
  • Intellectual Loss – While outsourcing with other countries can lead to increased cash flow into their system, globalization may lead to a loss of intellectual distinctiveness as Western ideas are forced upon Eastern thoughts and ideas. This can reduce brainstorming and a different perspective when attempting to streamline operations.
  • Job Loss ­ - Global sourcing has been labeled as the main enemy of individuals that work within production facilities in developed countries, such as the United States. Sending jobs overseas has been a particularly hot topic for many industries. As these jobs are shipped out to other countries, this can be particularly harmful to the economy of the country where the business began.

A software that can aid with any production needs is PlanetTogether’s Advanced Planning and Scheduling (APS) Software. Advanced Planning and Scheduling (APS) Software is a must for manufacturing that are seeking to enhance their overall operation through streamlined scheduling and ultimately locating any areas that are prevalent with waste. Advanced Planning and Scheduling (APS) Software will allow your facility to maintain a competitive advantage within the marketplace and ultimately take production to the next level.

Advanced Planning and Scheduling Software 

Advanced Planning and Scheduling (APS) software has become a must for modern-day manufacturing operations due to customer demand for increased product mix and fast delivery combined with downward cost pressures. APS can be quickly integrated with a ERP/MRP software to fill gaps where these system lack planning and scheduling flexibility and accuracy. Advanced Planning and Scheduling (APS) helps planners save time while providing greater agility in updating ever-changing priorities, production schedules, and inventory plans.

  • Create optimized schedules balancing production efficiency and delivery performance
  • Maximize output on bottleneck resources to increase revenue
  • Synchronize supply with demand to reduce inventories
  • Provide company-wide visibility to capacity
  • Enable scenario data-driven decision making

Implementation of Advanced Planning and Scheduling (APS) software will take your manufacturing operations to the next level of production efficiency, taking advantage of the operational data you already have in your ERP.

Related Capacity Planning Video

 APS Resources

Topics: sourcing

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