01242020

11 Reasons Why Working With a Contract Manufacturer Is Smart Business

This includes world-leading companies such as Apple, Boeing, Nike, Adidas, John Deere, etc., as well as small and medium-sized startups with specialty products. Leading contract manufacturers provide services that primarily focus on two critical areas:

  • Efficiency: Areas related to lead time, available resources, skill sets, engineering, and development to full production launch.
  • Economically: Areas that impact costs including design for manufacturability, production tooling/lines, raw materials, labor, logistics, and more.

These two areas are the driving factors behind the utilization of contract manufacturing by the most successful startups and the largest technology companies in the world. Below I have illustrated some key reasons how contract manufacturers can add value to your business.

Investment savings

Outsourcing your product to a contract manufacturer unties you from spending on operational and maintenance costs of machines and equipment. Another benefit is your company isn’t be responsible for salaries, wages and other benefits for the operators. Companies also find it beneficial to outsource production to countries with lower wages.

Product savings

Contract manufacturers specialize in producing products with unique processes and materials. With extensive experience and know-how, capable contract manufacturers introduce new methods and materials that can reduce your costs without jeopardizing the quality of your product.

 IP confidentiality and protection

Dealing with a contract manufacturer that has IP protection protocols set up reduces the risk of your IP leaking. Having one centralized and vertically integrated contract manufacturer who controls product design, tooling, production and supply chain reduces the chance of your IP ending up in the wrong hands.

Allocation of resources

Using a contract manufacturer to manage your supply chain and build your product can free up crucial resources that can otherwise be redeployed to other vital areas such as sales, marketing and distribution. Attempting to manage a large number of vendors, arranging production, and planning logistics consume scarce resources needed for the core strengths of your company. Furthermore, doing this from a location halfway around the world is extremely inefficient, adding variable costs, and creating a less than ideal process.

Shorter lead time

Hiring an experienced contract manufacturer brings expertise and a supply chain network that provides you with the shortest possible lead times. In most cases, the contract manufacturer specializes in specific materials and processes, and they have built relationships with raw material suppliers and have developed methods that efficiently replenish parts when necessary.

Quality

Leading contract manufacturers have their quality control system in place to be used throughout your production process. These aren’t experimental programs, but proven quality systems meant to ensure the highest quality throughout the entire manufacturing process. This happens by systematically identifying and eliminating quality issues as early as possible in your production process.

Advanced skill sets

Companies can take advantage of their lack of knowledge and skill sets by hiring the right contract manufacturer. Many contract manufacturers have established relationships with raw material suppliers and have a more in-depth understanding of the production lines needed to improve the total value of your product.

Development

Today’s contract manufacturers are taking new steps to provide additional value through product development services. With their manufacturing knowledge, leading contract manufacturers are also targeting new product development to help shorten and improve the development process in terms of speed, efficiency, quality and costs.

Speed is priority for developers

The top priority for those developing products is speed. Partnering with a contract manufacturer that has experience in your field will provide you with the right solutions, faster turnaround, better engineering, high-quality prototypes, and a smooth transition into production.

Improved transition from development to production

Studies show that over 30% of contract manufacturers receive requests for parts that aren’t manufacturable, and less than 10% report receiving parts that can be effectively manufactured. Working with a contract manufacturer to support product development will ensure that 100% of your parts and component be made appropriately at a competitive price. This leads to a smooth transition into production instead of delaying production to re-engineer poorly designed parts.

Engineering

Leading contract manufacturers have the best knowledge of materials and processes used to effectively manufacturer certain products. They also have the best understanding of how to optimize the product by decreasing complexity, reducing unnecessary materials, and leveraging the best processes necessary to produce it. Having a contract manufacturer on your team to collaborate with on development will ensure a functional design that’s guaranteed to be made efficient and economical.

Changing to a simple and smarter solution

Developing a partnership with a contract manufacturer can have significant advantages that improve the production efficiency and costing of your product. In finding the right manufacturing partner, you can better utilize limited resources, leverage their expertise, and focus your efforts on your core competencies. Furthermore, partnering with a CM firm who offers development services, you can shorten your development window and expedite your product launch.

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