Subcontracting is crucial in modern manufacturing as it enables organizations to expand production, reduce labor costs, and enhance production efficiency. In this article, we detail what subcontracting is, why it is a necessity, and the benefits to all manufacturers.
What is Manufacturing Subcontracting?
Manufacturing subcontracting is pure outsourcing of specified manufacturing tasks to an outside company. These tasks can include specialized assembly, machining, coating, and/or welding. As a result, manufacturers can improve efficiency without the capital investment in specialized equipment and labor.
The Importance of Subcontracting
Subcontracting provides several advantages to manufacturers:
- Cost Savings: Manufacturers can avoid capital investments in expensive machinery or labor by outsourcing, as subcontractors offer potential cost savings on services and are typically more efficient.
- Expertise Access: Manufacturers can outsource services related to a specialized task like precision machining, allowing manufacturers to ensure a higher-quality product with minimal trouble.
- Scalability: Manufacturers can scale production without expanding square footage, thereby minimizing labor bottlenecks.
- Maintain focus on the core: By subcontracting, manufacturers can concentrate on product structure and development, while employing subcontractors for non-core processes.
- Risk management: To some extent, subcontracting to someone else should help mitigate supply chain disruption, labor availability, and equipment failure.
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Industries That Commonly Use Subcontracting
Typical manufacturing industries that use subcontracting include various sectors.
- Automotive: Automotive manufacturers subcontract items like body panels and wiring to vendor suppliers.
- Electronics: Many electronics manufacturers subcontract PCB assembly and other components to achieve accurate and high-volume production.
- Aerospace: Subcontracting is commonplace for producing precision components, such as turbine blades and avionics.
- Contractors: Subcontracting is commonplace when contractors rely on someone else to complete electrical, plumbing, or HVAC work as required to maintain expectations for efficiency and quality.
- Textiles: Apparel brands will subcontract stitching of clothing, dyeing, and embroidery of textiles so that cost can be managed while ensuring quality.
Read our guide on Material Management of Sheets in Manufacturing.
How ManufApp Makes It Easy to Manage Subcontracting
ManufApp’s Manufacturing Execution System (MES) facilitates subcontracting in the following manner:
- Real-Time Monitoring: You can track production activities performed by the subcontractor in real-time to ensure timeframes are met.
- Seamless Communication: Clear and concise interaction with both internal teams and subcontractors.
- Quality Assurance: You have ultimately control over quality, enabling you to create quality requirements and metrics while automating quality checks for contractors.
- Procurement Support: You can assist your team with preparing product orders and tracking them against suggested inventory levels, ensuring timely delivery.
- Analytics: That performance will also be analyzed based on specific metrics, such as unit costing of materials for finished goods and delivery lead time.
Explore essential Production KPIs to monitor subcontractor performance and efficiency.
Conclusion
Subcontracting is an essential strategy for manufacturers to reduce costs, access specific skill sets, and remain fast and lean. ManufApp’s MES helps manufacturers build efficiencies around subcontracting, access quality metrics while eliminating the risk of exports, and help you be more competitive in a global economy.
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