Partnering with a Contract Manufacturer is seen as a wise decision for many companies. There are numerous reasons for this, though it’s important to note that in order for contract manufacturing to be worthwhile it’s crucial to ensure you’re selecting *the right* contract manufacturer. Evaluating the exact expertise, service offering and abilities of a contract manufacturer is critical to ensuring value and efficiency from the partnership.
The Benefits of Contract Manufacturing:
- Cost saving: by outsourcing elements of your manufacturing process, you can reduce your overheads significantly. Your in-house resources (such as labour, equipment, space, time) can be dedicated to more valuable activities, saving you money and time.
- Expertise: outsourcing to a contract manufacturer can give you access to knowledge and insight you may not have had in-house. Contract manufacturers work with a variety of products and industries, and have developed highly technical insights into niche subjects and builds. They may well be able to come up with more effective, lower cost or faster ways of producing your product(s), and/or ways of minimising in-field failure rates or improving product performance.
- Scalability: it can be difficult to scale production if your resources are limited or if you’re manufacturing internally. Contract manufacturers, however, generally have significant resources, so they’re more flexible in their ability to scale up or back production as necessary. With this flexibility you’ll have more control over demand fluctuation and maximising profit by matching demand.
- Economies of Scale: linked to scalability is economies of scale. Since contract manufacturers produce vast quantities of various products for their customers, they can benefit from economies of scale in purchasing bulk materials at lower cost. This cost-saving is then passed on to the customer, who benefits from cheaper manufacturing than if you were to produce your products / components in-house.
Of course, contract manufacturing isn’t always a golden ticket to success. It’s vital that when choosing a contract manufacturer you do your research, and make sure the manufacturer you’re partnering with has the time, expertise and ability to help you with your project. Choosing the wrong contract manufacturer, or one whose focus isn’t on collaborating effectively with their customers, could result in delayed deliveries, poor quality products or worse.
We find that best results often come from a contract manufacturer taking on the role of your manufacturing department. In other words: establishing a close, highly collaborative partnership with you as opposed to a traditional client-supplier relationship. Of course not all manufacturing companies operate this sort of collaborative approach so it can be difficult to find – but in our experience it works incredibly well, and can be beneficial to all involved when done right.