Growing Your Business and Gaining a Competitive Advantage through
Partnering with RTB Products, Inc.
Part 3: How can product assembly services affect your costs?
When you manufacture in-house, the cost of goods sold (COGS) fluctuates based upon the varying speed of your production. When that same production is transferred to a contract manufacturing vendor, the COGS becomes a static price component, immune from variable production line speed. Your company gains the ability to forecast, strategize and plan based on controlled, predictable COGS. In addition, the fixed costs of running that portion of your production line (such as facilities, production equipment and labor) have been eliminated and the variable costs are now within your control.
Partnering with RTB also produces another positive effect, an effect that has a wide-ranging impact on many areas of your business - compressing your supply chain. When RTB takes on the manufacture of components or subassemblies, your enterprise's supply chain becomes compressed; the number of steps or procedures required to manufacture a product are reduced.
The result is a potential reduction in production costs, but additional savings will be realized throughout your enterprise. A compressed supply chain will consolidate the number of vendors required to produce the final product. Therefore, the Purchasing department will be able to consolidate multiple parts into one new component or subassembly; Accounting will have fewer vendors to maintain; Human Resources will be able to deploy the best employees effectively and better manage temporary labor; Quality Control will have fewer parts to inspect; Inventory Control will have fewer parts to count and the enterprise will realize reduced inventory costs; and Shipping and Receiving will have a reduced receiving burdens.
In short, Partnering with RTB adds value to an individual part by combining it into a component or subassembly.
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