In order to reduce the production cost, outsourcing the production to an overseas company and receiving the product supply brings great advantages to the outsourcer.
In OEM production, the outsourcer provides detailed specifications of the product to the local manufacturer, and in some cases also provides technical guidance. It is adopted for improving the management efficiency and combining technical and sales alliances.
Advantage of Outsourcer
The advantage of the outsourcer is that the production capacity shortage will be covered, and the outsourcer can focus on the production of high value-added products while maintaining the product structure, and the investment for increasing the production becomes unnecessary, so the financial burden is small, too.
• Maintains production with low risk
• Flexible control of production volume without worrying about production cost
• Focus production time and effort on new product development
In particular, in the case of outsourcing to South Korea, which is an external demand-led country, the progress of FTA (free trade agreement) with the United States, EU countries, and China is ahead of Japan, so it is possible to enjoy not only the lower cost in production, but also the lower tariffs than exporting from Japan because of the merit of FTA.
Advantage of Manufacturer
The advatage of manufacturer: Maximize the production capacity, concentrate on improving technology level, the scale merit, etc.
• By maximizing the production capacity, occupancy rate can be increased which is expected to profit from.
• If the manufacturer has a lower technical level than the outsourcer, the manufacturer can receive technical guidance and know-how.
• It will also improve the technical level of the manufacturer.
① Company A
- Covering the lack of domestic production capacity
By outsourcing our own production of polyethylene glycol to an overseas manufacturer, we are able to cover the lack of our production capacity and to produce other products with the equipments.
Another advantage is that there is no need for capital investment to increase production.
② Company B
- Cost Down
We used polyester polyol from a domestic manufacturer, now we have succeeded in reducing costs and expanding sales of our own products as a result of outsourcing production to overseas manufacturers in order to bring cost benefits.
③ Company C
- Focus on new product development
By outsourcing the production of our own UV curable monomer to overseas manufacturers, we are now able to produce high value-added products and concentrate on developing new products.