Kitting and assembly services are often outsourced by companies that either lack resources to perform these tasks themselves or would like to save on overhead costs.
These companies use services such as kitting, assembly and packaging to include several products into one single kit, which is then sold as a single product. This way, companies increase their sales by combining several goods into one retail product.
As a business, this results in very little paperwork because most of the services are being outsourced rather than being carried out in-house.
For most companies, these are the reasons that make them opt for outsourcing:
- A reduction is overhead costs
- An increase in quality of products
- A flexible volume supply
- No requirement for building infrastructure and hire manpower
- Relief from increasing raw material costs
Your company can benefit by outsourcing various services such as kitting, assembly and packaging. Let’s get into more details regarding these benefits:
1. Cost Factor
A major benefit of outsourcing kitting and assembly services is that your company pays the cost per unit; this allows easy budgeting for the whole year, giving you a clear picture of your financial expenditure.
Cost becomes more important of a factor when you manufacture your own products. You may have to deal with all the expenses of manufacturing as well as dealing with increasing costs of raw materials.
Outsourcing may also eliminate the need for warehousing; it may reduce the number of employees, increase your overall efficiency and productivity.
2. Quality of Products
Outsourcing kitting and assembly greatly helps in improving the quality of your products. This is because your company can dedicate all of its infrastructure and workforce to fulfill their core objective.
It is always a good idea to outsource a company that has an excellent reputation because they will be able to provide you quality services based on their experience.
3. Volume Flexibility
Outsourcing a professional company for your kitting and packaging needs will help you if you suddenly require additional units of your product. As your company grows, the demand of your products will also grow.
A company that is dedicated in these services can cope up with fluctuating demands – whereas if your company was doing all the work in-house, a sudden increase in required output may cause it to fail in keeping up with the load, possibly due to the lack of workforce management to deal with such cases.
4. Sub-Assembly Plants
If you were to carry out everything from manufacturing to packaging, it would require you to set up sub-assembly plants which would be a huge financial burden. Outsourcing these services, on the other hand, could lift the burden and help in saving your initial costs.
5. Raw Materials
If you were to sign an agreement contract on outsourcing, you would benefit from the consistent raw material costs throughout the agreement period; regardless of how much the cost increases in the market.
This could provide a major relief to new budding businesses.