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A dilemma confronting start-ups or small businesses is whether to produce in-house or outsource. This decision quietly shapes profitability, delivery speed, and brand reputation, so it's something to be taken seriously.
The wool felt market is predicted to reach USD 33.71 billion by 2032. Sustainable goods have a growing demand. Businesses must therefore decide on which manufacturing process to use. Let us explore the two major choices that are given.
You may think internal production is the best answer. However, hidden costs shift that perspective.
Outsourcing vs In-house
Outsourcing involves working with a third-party business. This process works best for small to medium-sized stores as it allows companies to focus on core business activities. For makers like Felt and Yarn, with a monthly production capacity of over 100,000 and more than 2,000 skilled women artisans, production is handled internally, offering the flexibility of outsourced services.
In-house production, on the other hand, is the process by which a business manages its manufacturing activities internally. In the context of Felt and Yarn, instead of allowing other companies to produce our felt products, we create and manufacture all crafts and retail items. This includes sourcing the wool, quality control, and delivery, all done under one roof.
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Outsourcing vs in-house manufacturing cost analysis
Hidden Cost of In-house Production:
High Cost:
Starting production from scratch involves not only purchasing equipment but also finding the proper premises, setting up the necessary infrastructure, and complying with relevant regulations.
These substantial expenses can strain small businesses' financial resources, especially when budgets are limited.
| Felt and Yarn has 3 well-maintained production units and 3 warehouses & QC absorbing these costs for you.
Production complexities
When volumes are high, production scheduling must be efficiently planned to avoid a bottleneck.
Initially starting, it can be challenging to accommodate the internal team, which can often lead to a loss of quality, delays in work and loss of sales.
| Felt and Yarn has 100k+ monthly production capacity and can handle a large volume of orders.
Expertise and Skilled Artisans
Hiring can come with a flight risk in case of in-house production. Moreover, employees expect benefits, training, and skill development, which are resource-intensive.
Additionally, addressing turnover, maintaining well-maintained facilities, and complying with other regulations will require significant investments.
| Felt and Yarn has over 2,000 employees, all well-managed under one production house.
Logistics
Logistics is one of the most underestimated complexities in in-house production. Managing packaging, documentation, customs compliance, and last-mile delivery adds a significant operational burden.
Delays in customs, mislabeling, or inadequate tracking can damage client relationships and brand credibility.
| Felt and Yarn has over 40,000 orders delivered to 75+ countries, offering comprehensive logistics support and real-time tracking.
Why Outsourcing Felt Production Makes Business Sense?
Outsourcing of production is helpful tactically, as it tailors explicitly to B2B brands in home decor, pet goods, and gifting industry.
Access to Professional Expertise:
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Companies can tap into a skilled workforce along with delivery systems and professional infrastructure by outsourcing. Because companies leverage these specializations, they benefit from an efficient manufacturing process with improved quality.
| Felt and Yarn has a decade of experience in handmade felt products. Global retailers have trust in the quality as it meets international standards for ensuring premium products.
Cost Efficiency and Increased Capacity:
Outsourcing results in significant cost reductions because it eliminates labor, infrastructure, and supply chain expenses. Scalability is also provided to ensure that the production capacity meets market demand.
| Felt and Yarn offers bundle services at wholesale prices. When demands are high, we scale up promptly and without compromising quality.
Focus on Growing Business:
When businesses outsource, they have more time to focus on their core competencies. Brand development, customer care, and market expansion can be your business focal point.
| We take care of the manufacturing and delivery, while companies can involve their internal team in strategic operational activities to grow their market.
Product complexity and customization:
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If a product requires a complex procedure, like a mix of both techniques, like wet felting and needle felting, or highly specialized expertise, and if the outsourcing company offers customization, it would be best to choose them.
| Personalization is a core strength at Felt and Yarn. From advanced felting techniques to custom sizes, colors, shapes, and packaging. We specialize in turning complex product concepts into scalable, high-quality outputs.
According to Deloitte’s Global Outsourcing Survey 2024, spend optimization will always be a key driver for outsourcing. However, executives must continue to enhance core capabilities and increase agility.
Making the Right Choice for Your Business
Both sides have their upside and downside; it’s not a one-size-fits-all approach. Each business must analyse its situation, expertise, and resources to determine which production strategy suits it.
Internal production is more trustworthy, but it is also more cost-intensive. However, outsourcing is excellent for saving time and cost. The marketplace is full of professionals who can finish the work in a short time. But the time differences and international nuances.