Tips for Partnering With a Contract Manufacturer

3 MIN. READ

Many businesses come up with innovative ideas but lack the capacity to realize them. Working with contract manufacturers can provide the resources to bring a concept to market.

What is a Contract Manufacturer?

Many companies hire contract manufacturers to make their products or provide other support. Contract manufacturers turn out everything from small computer parts to food. These manufacturers must meet quality standards and government regulations for each sector.

What are the Advantages of Contract Manufacturing?

● Most smaller companies know all too well the economies of scale or lack thereof. By turning out larger runs, a contractor helps keep costs down. Lower costs lead to pricing that competes in the marketplace.

● In the current tight labor market, wages continue to rise. Qualified employees become subjects in a bidding war. Contract manufacturers have the labor force needed to turn out products without breaking the bank.

● A company that focuses on too many areas can end up neglecting all of them. Using contract manufacturing allows a firm to devote more resources to growth.

● In this age of social media, quality issues are more vital than ever. One nasty tweet or Facebook post can send sales into a tailspin. The right contract manufacturer can provide the skills, know-how, and specialized staff to ensure a product meets or exceeds marketplace standards.

What are the Different Types of Contract Manufacturers?

Contract manufacturers provide services in a variety of ways. Four common types are:

1. Turning out finished merchandise. This can involve design and engineering. The hiring company then sells the goods under its label.

2. Producing components for a product. Examples of this might be small parts used in electronics put together and sold by the hiring company.

3. Providing labor. If a company requires expertise in a particular field, contract manufacturers may already have it on board. A contractor may also be cheaper than hiring a larger workforce.

4. Providing manufacturing equipment. As interest rates rise, the cost of capital investment may be too high. Using a contractor's equipment keeps expenditures to manageable levels.

Hiring companies can choose whatever type of manufacturing contractor best suits their needs.

Is a Contract Manufacturer the Right Match?

Despite the many advantages of contract manufacturing, the arrangement can only be successful if the hiring company's requirements align with the contractor's capabilities. While off-site production might bring to mind fabrication in China or other foreign locales, the United States is home to many contract manufacturers. The proximity of a contract manufacturer simplifies the oversight of facilities and final products. It may also lower shipping costs.

Elements for a hiring company to examine may include:

● Is the facility certified to ISO or other industry standards?
● Is the facility well kept?
● Is the facility well managed?
● Can the facility drop-ship?
● Can the facility handle supply chain issues?
● Can the facility handle changes in demand?
● Is the facility open with the management of the hiring business?
● Does the facility maintain respect in the marketplace?
● Is the facility financially stable?

What are the Red Flags in Choosing a Contract Manufacturer?

1. Lack of quality records. Whether required by a particular industry standard or not, a contract manufacturer should have documentation of consistent quality. If the facility can't make these available, the hiring company should consider looking elsewhere.

2. No control by the hiring company. If the hiring company can't monitor production, it can't guarantee the quality of its product. If a contractor refuses to allow regular inspection, it may have something to hide.

3. Lack of response to a changing market. In the last two years, businesses have often seen extreme changes in market conditions. Demand has both fallen and mushroomed. A manufacturing contractor with no flexibility to respond to volatile situations can be a recipe for disaster.

4. A history of delays. Customers in these times expect prompt delivery. If a contract manufacturer has a history of backorders and late shipments, the hiring company should walk away.

What are the Steps Toward a Successful Partnership?

Above all, the hiring company must determine if the facility can solve manufacturing issues unique to the product. No business needs glitches that bring the flow of its goods to a screeching halt. In addition to checking out a contractor's history, companies should share total requirements and any bottlenecks they can anticipate. At the start of working with contract manufacturers, a complete meeting of the minds will prevent headaches later.

How can a Business find a Contract Manufacturer?

Unfortunately, entering "contract manufacturing" into Google or another search engine produces a slew of entries by companies, each extolling their virtues. Fortunately, IndustryNet provides a solution. Listings here provide the information businesses require to find contract manufacturers that match their needs. IndustryNet allows sorting by capabilities as well as geographic area. Searchers can also contact contractors directly from listings. IndustryNet cuts through the noise and brings businesses the data they need to get their products into production. If you would like to find the proper contract manufacturer, set up your free account and send a request-for-quote today.