Manufacturing Insourcing Model

Client: Manufacturer deciding on whether to insource manufacturing

A manufacturer (with ˜$25 million of annual revenues) hired Sapling to determine whether to insource manufacturing, instead of using several third-party vendors around the world.

3 Key Insights:

We developed a detailed financial model showing the relative benefits, including payback period, of insourcing relative to outsourcing.

 

We noticed a Capex of approximately $4 million would generate substantial cost savings, resulting in a 1.5 year payback period.

 

The company chose the insourcing model, obtained bank funding, and they have recently started production.

Discounted Payback Period of Insourcing VS Outsourcing Scenarios

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