As the world of manufacturing grows more complex, and logistics become more challenging than ever, many organizations are exploring the advantages of partnering with a contract manufacturer; of which there are many!

Contract manufacturing, also known as outsourcing, consists of hiring a third-party to perform functions that organizations may or may not have the time, space, equipment, or expertise to handle in-house. In certain scenarios, a contract manufacturer can become an integral part of an organization’s operating strategy by delivering turnkey manufacturing solutions.

Below we explore the benefits of a successful relationship and delve into how selecting the rich contract manufacturer can help to lower costs, provide flexibility, utilize expertise, and improve focus.

By partnering with a contract manufacturer that already knows the manufacturing process, you can:

  • Save on capital expenses such as facility and production equipment.
  • Save on labor costs such as wages, training, and benefits.
  • Significantly lower your operating expenses.
  • Allocate your saved funds towards your unique value and core competencies.
  • Have access to more cost-effective sourcing.
  • Reduce regulatory requirements and costs.
  • Eliminate liability on import/export policy errors.

Most importantly, the cost savings can be passed along to your customers which will help you gain a competitive edge in the marketplace.

Improve the operations of your organization

The decision to partner with a contract manufacturer is made due to the flexibility it affords. This flexibility not only improves the operations of an organization, but it can also have a positive effect on the bottom line. 

By partnering with contact manufacturer, organizations can seamlessly scale their operations in response to market demand. This means that no matter the level of demand, they will always be able to meet your customers’ needs. This, in conjunction with having the ability to easily break into new markets and change priorities/schedules in response to any issues, ultimately puts organizations who utilize contract manufacturers in the position to out maneuver their competitors.

Additionally, contract manufacturers allow organizations to be more financially flexible. By freeing up funds which would otherwise be reserved for capital investment, organizations can now to divert money to sudden, high-priority needs.

When should I design and manufacture a product?

When deciding to design and manufacture a product, it makes perfect sense to partner with a company that has experience and expertise – both of which a reputable contract manufacturer will have.

Contract manufacturers naturally build up and preserve a vast pool of knowledge. This knowledge spans from knowing which material would be most efficient to understanding – thru their various relationships – which suppliers and methods will best meet product timelines without jeopardizing any engineering, quality, or logistics. Additionally, as the industry is seeing, modern manufacturing requires plenty of technical knowledge to function smoothly. Outsourcing to a contract manufacturer enables you to leverage the latest technologies which will ultimately lead you to providing better service to your customers without incurring the hassle and costs of making expensive technology upgrades.

Focus on your strengths and core competencies

It is important that every business plays to its strengths. For this reason, many organizations turn to contract manufacturing. By partnering with a contract manufacturer, organizations free themselves up to focus on their strengths and core competencies; ultimately allowing for high-level efficiency and productivity.

By partnering with a contract manufacturer your organization can:

  • Focus your attention on core innovation, strategic planning, and other principal business activities.
  • Keep from getting bogged down in the minutia of manufacturing.
  • Have access to relationships that offer cost-savings and an understanding of how to enter a market that may otherwise have been prohibitive.
  • Concentrate on functions that drive revenue.
  • Make you company leaner and more competitive: When time is freed up, so is money.

Organizations should view contract manufacturers as business value multipliers. The combined benefits of cost savings, operational flexibility, increased focus on core business values, and access to vast industry knowledge produce a compelling business option for companies looking to manufacture their product(s).

It is important to note, however, that while contract manufacturers provide many advantages, these advantages can be offset if you choose the wrong partner. Choosing the right contract manufacturer can be a long and arduous process. There are many factors to consider. Therefore, be sure to take care to consider all the relevant aspects before settling on a partner.

When researching potential partners, be sure to consider and have in-depth conversations about the following factors:

  • Capability
  • Experience & Qualifications
  • Capacity
  • Personnel
  • Equipment & Technology
  • Location
  • Financial Stability

To learn more about the benefits of working with a contract manufacturer, download our eBook, now!