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CONTRACT MANUFACTURING: THE VALUE OF A NETWORK BASED APPROACH | 2024
Outsourcing takes many flavors by industry. The reason varies. In consumer products, the products with low volume and high demand variability are outsourced to improve manufacturing efficiency within the enterprise. New products are frequently outsourced for either specialized technology or time to market. In contrast, in high-tech and electronics, contract manufacturing is primarily used to manage overflow capacity. In Figure 1, we share the drivers. Capturing the Opportunity
Figure 1. Reasons for Outsourcing
Specialized technology
59%
Overflow capacity
57%
Reduce cost
49%
Marketing and sales promotional support - displays, special packs, etc.
22%
Time to market
14%
Meet Corporate Social Responsibility (CSR)/ESG goals
3%
Others
8%
Source: Supply Chain Insights 2024 Q14. Why does your company outsource manufacturing?
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