Insourcing vs. Outsourcing: Pros & Cons

Manufacturing firms constantly have to weigh their options when it comes to where and how products and materials are sourced. From shipping costs and worker overhead to logistics and quality control, much needs to be considered when choosing to outsource or insource parts of the manufacturing process. Here are some pros and cons of insourcing versus outsourcing in manufacturing.


Insourcing Pros

  • Quality control is much higher
  • Much faster in-hand date
    • Save on shipping costs
    • Naturally shorter, more optimized logistics network
  • Can claim “American made” or “sourced locally” in PR efforts


Insourcing Cons

  • Likely more expensive due to:
    • Higher wages
    • Improved working regulations
    • New machinery
  • Can take longer to implement new process flows, train employees and build out production areas


Outsourcing Pros

  • Tends to be much cheaper to outsource repetitive, small jobs
  • Likely relegated to a company that performs very set tasks with existing, optimized infrastructure and processes
    • Decrease in production turnover time
  • Increased business network for future outsourcing partnerships


Outsourcing Cons

  • Quality control is more difficult
    • No control over customer service or turnaround time
    • No relationship with workers to ensure satisfaction and wellness
  • Lag time between finished product and in-hand shipment is much longer
  • Distance over several time zones can delay communication
  • Sunk shipping and additional labor costs
  • Potential language barriers if outsourcing overseas


Many analysts believe the decision between insourcing and outsourcing comes down to a company’s desire to control quality or control costs. While there are certainly specific cases where a business is able to have the best of both worlds, there will always be tradeoffs with each style of manufacturing. Does your business utilize insourcing, outsourcing or a blend of both? Let us know in the comments below.


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