"No organization plans to fail- rather, they fail to plan…"- Steven Scott Phillips
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Modern manufacturing industries are practicing smart strategies for running their business operations efficiently. To sustain in the dynamic and competitive business world, manufacturers are planning more advanced and robust business strategies.
Hiring third party vendors for production, is one of the common business policies in today's business world. At the same time, it is a well-planned approach as, it speeds up the production process and eases the production load on the industries.
Let us consider an example:
Omega Industries, is a manufacturer and supplier of automotive mirrors. They cracked the deal with Pioneer Automobiles and managed to get a contract, to produce 300 mirror fitments for them. Pioneer Automobiles manufacturers of battery operated scooters, were looking for a vendor who could supply rear view mirrors for their scooters and Omega turned to be the best choice for them, as they had the specialized machinery to produce the mirrors. Pioneer had to only supply, the glass raw materials and focus on the other tasks of manufacturing process.
Insourcing is one such smart move, where manufacturers are taking opportunities to provide there specialized services/ skill to those in need. But, it is important to keep a proper track of the different aspects like stock visibility, contract management, managing the labor charges invoicing etc.
How can insourcing help SME's to grow?
- Capacity assessment: Insourcing service providers can help, in the production aspects for their clients. In the scenario mentioned above, Omega Industries is assisting in the production process for Pioneer Automobiles. Eventually, the insourcing service provider Omega Industries in this case, get to know their scope of operations. They improvise with every single contract they take in future. In a way, they gain more expertise in their niche skill of mirror making.
- Recognition: Insourcing helps in getting recognition. As in the above example, Omega Industries can get an acclamation easily, when they collaborate with Pioneer. This would have taken a considerable time, if they would have tried to penetrate the market with their products alone. The market reputation earned by Omega, can now get accelerated.
But to make an insourcing efficient as well as effective, it is necessary to follow some protocols. To complete business process proficiently, first a contract needs to be signed between both the companies. This contract can include order details, manpower capacity required, timeline to complete the order etc.
Pioneer Automobiles could efficiently handle all the formalities. They could quickly jot-down the requirements, manage & track the processes at their end. However, for Omega, getting all the processes in sync was a little tough as, their business processes were running parallel and not integrated with each other. So initially, getting the accurate insights from the respective departments was not so easy.
Where was Omega falling short?
Although equipped with all sorts of capabilities, the missing link for Omega was, an integrated solution which could bring all the processes under a single platform and share useful insights. A new age ERP solution was the much needed solution for Omega. They decided to go ahead with a modern ERP Solution provider.
Streamlining operational efficiency with an ERP:
- Contract management: An efficient ERP solution can help in contract management. It can help in creating and managing contracts, execution and analysis to maximize operational and financial performance of the business. It can also help in reducing the financial risks. Omega Industries could now analyze and assess their operational flow for successful completion of their job work.
- Stock visibility: For completing the order of 300 mirrors, Omega Industries was receiving some glass material from Pioneer, recording the goods received and tracking the use of the same, was an important aspect. An efficient ERP, helped in providing accurate insight about the goods received, the stock available in the warehouse and helped in the production plan.
- Labor charges invoicing: An ERP can assist in creating the labor charges invoice. Thus, it can facilitate in proper and accurate payment process to the laborers, in order to avoid any discrepancy. Now, Omega Industries can easily prepare invoice for their labor charges and make smooth payments to their staff workers.
- Job work integrated with production: An efficient ERP can easily integrate job work functionality with production. Assessing the capacity of job work and integrating it with the existing production functionalities like materials requirement planning etc. provides insights about the different business operations.
- Insourcing integrated with outsourcing: After entering into a contract, if the insourcing service provider, runs short of their capacity or face challenges in an existing process, they can look at outsourcing to another vendor & complete the order in areas they get stuck in. An efficient ERP, can easily integrate and track the two processes.
One of the primary advantages of insourcing is control. If you keep a process, or facility in house, the control exists with you. During outsourcing, some of this control is passed to the supplier. Keeping control by insourcing has its downsides, as well. You may need to increase staffing and resources. It is here that an efficient ERP, can provide analytics/reports which facilitate, in taking critical business decisions.
EPPS offers innovative, robust, easy-to use, highly agile & scalable ERP solutions which can manage the above functionalities, smoothly and efficiently. EPPS is helping companies like Omega and others in different verticals, to confidently take insourcing orders that are properly managed and tracked with an integrated system.
With a simple and efficient ERP solution by EPPS, make your business dwell well. We understand, the importance of carving a competitive edge, amidst the cut throat competition. Don't fail to plan, it will cost your business in the long run.
Partner with EPPS. Experts at making your business simple!