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Manufacturing versus outsourcing: Which is best for you?

Deciding whether to manufacture or outsource products is a decision that can drive the success or failure of your brand in a competitive market.

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The supplement and nutrition industry for instance, has more than 8.3 million Australians purchasing vitamins, minerals and supplements every six months, so ensuring our business provided value that was worthy of people talking about was vital.

As co-founder of ATP Science, one of Australia’s fastest growing supplement companies, I wanted our point of difference to be about getting results for our consumers.

In 2015, we made the decision to insource, develop and manufacture our own products locally in Brisbane – to provide our clients with quality products unlike anything else in the industry.

We believe in order to help people achieve their health goals, we need to produce great products that are backed up with information our consumers can understand. We’ve garnered the business and science knowledge of our expert team of researchers and developed products that work.

Here are my insights into the benefits of insourcing and manufacturing products to help your business.

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What is insourcing versus outsourcing?

Simply, outsourcing involves obtaining help from organisations not associated with your company to complete specific tasks, like manufacturing products.

While insourcing involves assigning tasks to people within a company and is usually chosen to control production processes and service quality.

Benefits of insourcing: 

  1. Control

The main benefit of choosing to manufacture your products instead of outsourcing is control. You and your staff have primary control over production processes and service quality, rather than handing that over to an outsourced supplier who may not have the best interests of your company at heart.

Increasing staff costs and recourses may be on the cards if you choose to manufacture, but this can be balanced by better control and flexibility you gain from insourcing.

For instance, our decision to manufacture our own products at ATP Science has been a great success.

The Directors at ATP Science had confidence that with my business background and project management experience and the knowledge of my co-founder Matt Legge’s two decades in naturopathy, medical herbalism, nutritional medicine, food therapy and sports injury gave us the ability to build a team to manufacture in house.

  1. Costs 

Choosing to insource can be financially beneficial. As many small business owners know, we can face a number of challenges including financing difficulties, high costs, volatile cash flow and vulnerability to local and international economic conditions.

However, using existing resources to their full potential such as employees, business skills and equipment to complete tasks and processes in combination with strategic acquisitions in personnel and equipment to fill the gaps can be cheaper than outsourcing in the long run. Also, return on investment can be seen in a shorter period of time than many may think is possible.

Hiring internally, where possible is always a great place to start and a way to cut costs. The benefits to hiring from within is that your current employees already understand how your business operates, the culture and it rewards them to potentially move into roles to match their passion, talents and skillsets.

  1. Reputation 

Insourcing can also have major benefits on customer satisfaction and reputation management. For example, hiring workers in Australia can position your business more favourably against foreign competitors.

Developing and manufacturing all of our products in Brisbane has increased our customer satisfaction and boosted our reputation. We have been able to create a range of 27 supplements including protein powders, protein bars, fat loss supplements, vitamins, gut health aids and general wellbeing enhancers.

As we have more control over our production processes and service quality, we can ensure all products are tested to meet our own internal code of conduct while adhering to Good Manufacturing Practices (GMP) ISO 9001, HAACP, FSANZ standards while maintaining a 5-star food rating from local government. While insourcing has been out of vogue and goes against many industry norms from various sectors, we believe it is a significant part of the “secret sauce” that sets ATP Science apart for more reasons that may initially met the eye.

By: Jeff Doidge, co-founder of ATP Science

 

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