Contract Manufacturers Versus Profit

Inadequate Contract Manufacturers Can Break Your Product

Contract manufacturing is becoming more prevalent in all industries across the world to cut out factory expenses and save the bottom line. There often comes a point when companies choose or need to go outside of their own company, even if they have their own similar factories, to complete the production of their part or product. Contract manufacturers do not only save the outsourcer some manufacturing costs, they can also increase quality control and add more flexibility to the manufactured product development.

In this day and age, companies’ budgets shrink and margins become tighter, and they have to streamline their manufacturing. For existing factories, sometimes they need to make a choice between keeping all manufacturing at their own plant or outsourcing some of the work they need to contract manufacturers. For companies that do not have their own plant, contract manufacturers are their only solution. One should consider contract manufacturing an extension of one’s own operation.

When factories don’t make the full product they sell, they create the parts of the product that they’re best at, or that make the most sense (cents), and use contract manufacturing to supply the rest. Then they assemble the parts together when all they’re made and shipped.

Custom Metalcraft has a factory in Springfield, MO that makes tote tanks, but they are not expert at the intricacies of ball valves or cam and groove fittings so they chose Con-Tech Intl in New Orleans, LA to be their contract manufacturers to fulfill orders for those parts.

There are different scenarios of using contract manufacturers. The first is repeat business or repeat long term production where a company might contract their ongoing fabrication to another. That’s why it’s important to choose the right manufacturer. If they don’t deliver on time or they produce bad parts or products, your product will suffer and so will your reputation and business as the word gets out. Dependable contract manufacturing is not all that easy to find, and if one locks into a long term deal with one that is not sufficient, it could be catastrophic.

Sometimes companies do a one-off or even a one-time mass purchase of something either as a test or prototype, or because they only ever need one of whatever it was. While this relationship may require a contract, it’s not necessarilly what is refered to as contract manufacturing becuase it is not ongoing. Most contract manufacturers offer a huge discount if you purchase mass quantities of one item. You’ll have all the parts you need to produce your product without many of the trials and tribulations of making them completely yourself.

The trend is to hire contract manufacturers to reduce costs, and capital expenditures. Contract manufacturing will also decrease the cost of supplies and allow your company more flexibility for production. However, there may be problems dealing with contract manufacturers, especially if they are in another country.

Quality control can be severely compromised or delivery may be held up for reasons beyond your or their control. Do the research before signing up for contract manufacturing so that your situation doesn’t end up being Contract Manufacturers Versus Profit instead of being Contract Manufacturing Equals Profit.