Outsourcing in our country appeared not so long ago, but quickly became popular. The performance of certain administrative and other functions is possible in any area of economic activity, including production.
Terminology
Outsourcing of production activities is the full or partial transfer of the production process to an outside organization. At the mercy of the contractor, you can transfer the manufacture of individual components or spare parts, or you can completely the whole process.
However, it should not be confused with subcontracting, which means a slightly different activity. A subcontract involves short-term relationships, for example, the production of specific products for a specific contract. Suppose a customer has signed a contract for the supply of 10 thousand bicycles, but production capacities make it possible to produce only 2 thousand per month. In this case, he can find a contractor and order him to produce 8 thousand units of products or all of 10,000 in total. In this case, long-term cooperation is not expected, but only within the framework of fulfilling obligations under a specific contract.
Production outsourcing is a long-term cooperation. For example, the customer completely transfers the function of making chains to bicycles to the contractor or the production of children's tricycles.
Kinds
In the framework of production outsourcing, the following types of it are distinguished:
- production of raw materials;
- manufacturing of components and blanks;
- outsourcing of individual functions and operations designed to ensure a complete production cycle;
- technological;
- third-party involvement.
Reasons for attracting third parties
Naturally, the most basic reason is economic. It is often much cheaper to involve a third party in the process than to ensure a complete production cycle. Production involves not only the manufacture and production of products, but also maintenance of equipment, hiring workers, providing them with special clothing and protective equipment. Outsourcing helps to reduce costs.
Saving time is the second factor pushing entrepreneurs to attract a contractor. It is much faster to assemble a bicycle from ready-made components and spare parts than to make all the components yourself. As a result, the efficiency of the production process as a whole is increased.
The third factor is the rational distribution of personnel. Highly qualified employees are better to engage in more complex tasks.
In addition, if the state does not have suitable production personnel, then it can be attracted under the terms of a production outsourcing agreement, that is, not be hired, but ordered, for example, to produce a drawing or a separate unit. The same general cleaning of the workshop can be done with the wrong hands.
The fourth factor is the ability to gain access to new technologies without acquiring expensive equipment.
Outsourcing will help when equipment breaks down or requires scheduled technical work.
And, of course, outsourcing allows you to focus as much as possible on the main goal of entrepreneurial activity, as they say, not to be distracted by trifles.
When is it more rational to refuse a contractor
In some cases, production outsourcing can harm a business. It is impractical to attract a contractor if its services affect the cost of the finished product.
There is a big risk that the quality of outsourced parts or assemblies will be very low. In this case, it is better to refuse the services of such a contractor, even if its price offer dumps the entire market. In any case, it is recommended that you always order a test batch to ensure quality, as well as to carry out quality control on an ongoing basis throughout the duration of the contract.
Production outsourcing measures can become completely ineffective if the contractor’s efficiency has significantly decreased, and the entire manufacturing process is inhibited.
An important role is played by the monopolization of the outsourcing market due to the small number of “players”. In this situation, you can attract foreign partners. Although the cost of their services will be higher, there is a high probability that the percentage of rejects will be minimal and operational characteristics high. 
Staff
Outsourcing of production personnel brings many benefits to the enterprise. This is especially true when production is seasonal. Holding a large number of staff throughout the year is not necessary, and extra expenses are not needed. Just in such a situation, outsourcing helps. The contractor provides the customer with the necessary personnel within the period specified by the contract and with the necessary qualifications. The owner of the enterprise does not need to think about sick leave and vacations. The contractor will help when employees are needed for a specific project, for example, to launch new products.
An outsourcing company will free the customer from the need to train staff, as employees will be selected according to clear criteria and certain qualifications.
And most importantly - the company gets rid of the burden of paying taxes on wages.
Occupational Safety and Health
What to hide, in addition to a tax audit, the management of any, especially a manufacturing enterprise, is scared by the inspection of the labor protection inspectorate. This field of knowledge covers a huge list of regulatory documents, so a qualified specialist always requires high wages. Therefore, one should take into account the number of enterprises that are registered annually. Last year, more than 10 thousand of them were formed, and almost all of them with a staff of up to 50 people. In such a situation, outsourcing of production functions helps in transferring functions in the field of labor protection. The main thing is that the contractor is accredited.
Contractor Functions:
- performance of all functions in the field of labor protection;
- certification of jobs in terms of labor;
- staff training on labor protection issues.
In addition to the fact that the customer gets the opportunity to receive a full range of labor, he is freed from the need to look for appropriate personnel and to establish the entire system in his enterprise. It also saves money on payroll taxes. The owner of the enterprise does not need to allocate funds to finance the labor protection system.
Outsourced sectors of the economy
Today, there are a number of enterprises that have appreciated the advantages of production outsourcing. These are enterprises of the chemical and metallurgical industries engaged in the supply of electric and thermal energy, oil and gas producing structures.Although not always third-party organizations are involved in the process. So, for example, it was economically more profitable for Lukoil to separate a well-drilling unit from the corporation and transfer these functions to its own company. In some cases, manufacturers refuse to produce specific components using outdated technology and transfer the manufacturing process to a contractor who already produces these products using innovative technology. For example, the same tractor plant closed its own production of hardware, which worked according to old technologies and could not be loaded even by 10%. The tractor plant is already purchasing hardware products from third parties.
In light industry, outsourcing of production processes has also been used for a long time. For example, the owners of the OGGI trademark are engaged only in the development of clothing models and their implementation, and everything is sewn on a contract basis.
At the same time, it is not yet possible to satisfy the demand of all enterprises wishing to switch to outsourcing. This is due to the fact that small business in our country is not sufficiently developed. It makes no sense to allocate workshops with outdated equipment and capacities as a separate enterprise.
Conclusion
Today, the trends in the modern market are such that if it is much more profitable for an enterprise to transfer the manufacture of part of the equipment to a third-party organization, then cooperation with the contractor should be chosen. This approach stimulates the optimization of large and medium enterprises.
