Businesses have been manufacturing and marketing their products to their customers since the onset of civilization. This explains why the traditional business settings and organizational structure has both manufacturing and marketing among other departments. Each department is specialized to undertake its roles within the company. Manufacturing department is entitled to design the products and manufacture them before delivering them to other departments to perform their function. On the other hand, the marketing department has the role of creating awareness about the products manufactured by the organization to potential customers.
However, over the last few years, organizations have been trying to streamline their organizational structures by combining several departments. Most of the companies have been able to achieve a small and streamlined organizational structure with simple communication channels and quick decision making. However, others have not been able to achieve their objective and are now moving to outsource as the best method of having a small and streamlined organizational structure. There are multiple benefits that organizations are outsourcing both manufacturing and marketing needs are getting.
What is Outsourcing?
Outsourcing is a strategy that involves hiring people or companies situated outside of the organization to handle various activities on behalf of the company. For example, outsourcing manufacturing consists of hiring a company to handle all the manufacturing processes and deliver final goods to the company for sale. The company hired must use its assets and resources to manufacture and deliver finished products after which it is paid for the work. For instance, A company selling vitamin products can easily outsource for private label purity food vitamins. The same happens in marketing, where an organization is supposed to create awareness and market various products and services on behalf of a particular organization.
Benefits of Outsourcing
Meet Consumer Demands
During the peak season, especially during the festive period, organizations experience an increased demand for goods and services. Most of the companies are required to produce a considerable number of products to meet the increasing demand. Sometimes the goods demanded might be too high for the organization to handle.
Moreover, the company might also need extra resources and equipment to increase its production capacity, which is not easier to get. Outsourcing remains to be the only feasible solution that a company can use to meet the increasing demand. Outsourcing finished goods and services will help the organization to meet the enormous demand and thus maintain its competitive ability in the market.
Focus and Specialization
Every company has its skills and capabilities that help it to remain relevant in a particular sector. Different organizations have different skills and ability to handle various important aspects. The skills and capabilities of the organization highlight its core competency. Some organizations have their core competency in marketing while others have their core competency in manufacturing. If an organization realizes that its core competencies are in finance and human resource management, outsourcing both manufacturing and marketing activities is no brainer. Outsourcing these aspects helps the company to specialize in what it can do best, which increases productivity and efficiency in the organization.
Access the Current Technology
Some companies don’t have the necessary technology to manufacture and market their products and services. Other organizations have old and obsolete equipment that are inefficient and which lower the cost of production. Instead of using obsolete equipment that leads to excessive losses in the company, it is worth to outsource finished products from a company that has modern equipment. Other companies might have ancient and outdated marketing strategies that don’t create any impact in the market. It is worth to consider outsourcing marketing activities from an organization that uses digital marketing and another modern strategy.
Increased Production and Output
Most of the manufacturing entities around the world are mostly interested in improving their production capacity. Production is not only measured in the goods and services produced in the company but also the rate of stock turnover. An organization that outsources both manufacturing and marketing service creates an opportunity of increasing production and output of the company. The manufacturing company will be helping the organization to increase its production capacity to the point where it will always have products for sale. On the other hand, outsourced marketing services will help the organization to increase the rate at which products are sold to the customers.
Any business owner is well aware that time is a precious commodity that organizations can use to increase their wealth. The problem is that businesses have many activities to handle, which makes it hard for them to maximize the time available. To maximize time, the owner of the business might choose to redeem the time by outsourcing services to different organizations. The companies hired will help in manufacturing and marketing the products and services produced by the company. On the other hand, the business owner will use the tome redeemed to undertake other essential activities in the growth of the company.
Professional Outsourcing Companies
Both manufacturing and marketing industries are dominated by professional outsourcing companies that are helping organizations to handle various activities. There are expert and professional outsourcing manufacturing organizations that manufacturer products on behalf of multiple organizations. Most of these manufacturers have experts and trained individuals who will help them to come up with modern product designs that can attract a large number of customers. The same can be seen in the marketing sector where multiple marketing agencies are performing marketing activities for various organizations.
Outsourcing both manufacturing and marketing is a direct and indirect method through which organizations can minimize overhead and operational costs. A company that outsources manufacturing activities does not have to buy machinery and equipment, which form the manufacturing plant of the company. It is very expensive to run and maintain a manufacturing plant and equipment. Repair costs might also be prohibitive for the company to handle, which leaves it with no option but to outsource. Companies that outsource marketing activities from professional marketing agencies minimize labor costs. Marketing is an expensive undertaking as companies need both laborers and infrastructure to run an effective marketing campaign.