Please explain the possible reasons of manufacturing through Subcontractor.

Dear experts,
     The question was asked to me in interview -
     Why we prefer Material manufacturing by Subcontracting Procedure?
     Even though the company is having own machinery set up and man power, then also what
     Are the Reasons for manufacturing the components by Subcontracting?
     Please mention all the possible reasons on this question.
     Thanks in Advance !

Hi Kiran,
Some of the reasons for sub-contracting-
1. Cost
2. Capacity not available at our plant, due to overload or full capacity booking by other processes
3. Subcontractor has requisite tools and / or better know-how of that process.
4. The volumes does not justify carrying out the process in-house.
Hope the above was helpful.
Regards,
Vivek

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Message was edited by: Pravender Kumar

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