How CIOs Can Select the Right Contract Manufacturer
manufacturingtechnologyinsights

How CIOs Can Select the Right Contract Manufacturer

By Manufacturing Technology Insights | Tuesday, October 08, 2019

CMs usually focus on manufacturing specific product types and develop the necessary supplier networks, quality systems, and manufacturing technologies. One can look for manufacturers, which specialize in the product type to have the desired manufactured product.

FREMONT, CA: Many businesses come across several challenges when working with a contract manufacturer. The problems may involve quality issues, cost overruns, and schedule delays. Any one of the problems can disturb the product launch or the business in general.

Carefully selecting a Contract Manufacturer (CM) can facilitate businesses to avoid the problems. The right CM can offer guidance to enhance the product design for manufacturing and assembly and keep the project on track. Below are fundamental approaches to ensure that enterprises select the correct contract manufacturer for continuing success.

Identify the Needs

Before starting the search, one can recognize the manufacturing capabilities required for the product. Businesses need to understand the company priorities and requirements that are essential to access the options and decide which CM best suits. For instance, businesses may get to choose between varied CMs depending upon the pricing, schedule date, and others.

The Products’ Defining Characteristics

CMs usually focus on manufacturing specific product types and develop the necessary supplier networks, quality systems, and manufacturing technologies. One can look for manufacturers, which specialize in the product type to have the desired manufactured product.

What Annual Production Volumes are the Business Forecasting

The answer to production volumes will help a CM determine a few crucial things. The significant aspects may include where they would manufacture the products, how promptly they would need to scale production, and how well the volumes align with their operations. Manufacturers usually optimize their manufacturing resources, facilities, and supply chain network for particular annual production volumes. So, businesses need to estimate for long-term and short-term production quantities to decide if the CM’s operations are a good fit for the product.

Consider the Unique Requirements

Recognizing the distinctive demands of the product and business will help enterprises communicate clearly with prospective CMs because of them has their limitations. So, some of the questions that one should consider are:

Will the business require the initial production units quickly?
Will minimizing the cost of goods be vital to the business model?
Does the product require highly specialized manufacturing and quality control processes?Do Not Hold up the Search

Start the CM search as soon as a preliminary engineering design is complete. The method will allow CM candidates to understand the specific manufacturing requirements. Additionally, the process also allows integrating their ideas as the business optimizes the design for assembly and manufacture.

Businesses can have the top three to five candidates sign non-disclosure agreements to discuss product and project information in detail. Besides, having an on-site visit at either party’s place of business is vital for both parties. The meeting lets them acquainted with each other, ask questions, and get an idea of what the working association would look like moving forward.

If exclusive testing capabilities or manufacturing processes are integral to the product, then it may make sense to visit the CM. Otherwise, having the right stakeholders in the same room can serve as a platform for discussing product needs, answering questions, and establishing the next steps. Depending on how complete the product engineering design is, it can also be an excellent chance to review the technical plan in detail.

Be Crystal Clear

Sincerity about the crucial project milestones, CM selection criteria, cost targets, and will assist the CM to understand the priorities so they can express concerns about meeting the objectives. Furthermore, businesses should also explain the types of expertise one needs, like the CM’s design optimization experience or supply chain network. Being transparent will help identify the CMs to best support the team.

Consider all the Required Cost

Enterprises will not necessarily save money with the lowest manufacturing costs. The quotations will often include the Free On Board (FOB), followed by the name of the shipper’s (CM) port. The law implies that once the products are loaded onto a shipping vessel, the buyer is in charge of paying all transportation expenses. Moreover, insurance costs and duties involved in moving the product from the buyer’s port to delivery are also covered. All the costs are to be included when preparing the quotes.

Ask Right Questions

Significant questions may differ by industry or project, but some of the essential questions to ask contract manufacturer may comprise:

1. Is pricing transparent; are there any hidden costs or fees?
2. What protections does the business afford for intellectual property?
3. Can enterprises expect any inconsistencies from order to order?
4. Can one demonstrate fair program renewals with past clients?
5. Will, there be a qualified and dedicated point of contact handling the project?
6. Does one have lean manufacturing or other processes to ensure effortless flow on-site?

Look for the Right Match

As businesses evaluate potential CMs for the product, on the other hand, the CMs are assessing how well the manufacturing needs fit their business model. In other words, one cannot select a CM as the manufacturing partner unless the manufactures choose the enterprise as a customer. From the CM’s perspective, a business is an attractive customer if the product type aligns with their manufacturing expertise and supply chain network, and the production volumes meet their targets.

Offer the top CM candidates with a request for a proposal, which contains the data they need to offer a quotation for services and goods. The manufacturer’s quotations should include itemized parts along with tooling costs, assembly costs, and identification of specialized manufacturing or process development costs. With numerous quotes in hand and the insights gained during the search, one can confidently pick the best contract manufacturing partner for the product and business requirements.

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