Manufacturer Contracting
What is Contract Manufacturing?
Also known as private label manufacturing and used in a wide variety of industries, contract manufacturing allows organization to outsources production processes. Companies will contract with an outside machine shop to produce a product or part of a product for them. This is most often used to increase production rates or to expand product offering without investing in new equipment and machinery. The company who hired the contract manufacturers will still have their label or brand on the property that is manufactured.
Advantages of Contract Manufacturing
Partnering with a reputable manufacturer gives you the option of contracting out some or all of your production processes leading to:
- Reduced Costs
- Freed Up Resources
- Easier Market Entry
- Improved Distribution Streamlined Supply Chain
- Streamlined Supply Chain
- Reduced Manufacturing and Lead Time
Contract manufacturing reduces resources and labor costs and may allow you to see lower energy, capital investment and raw material costs. It will also allow you to focus on your organization’s core competencies, leading to overall increased efficiency and performance. Lastly, you will gain the benefits of your partners existing relationships thus eliminating some of the logistical issues involved in the supply chain.
If you decide to outsource your entire production process, just a fraction of it, or even just a single part, you will reduce the overall manufacturing time and give yourself more time to focus on other aspects of your business.
When to use a Contract Manufacturer
Contract manufacturing is best suited for companies that face the following concerns:
- High Start-up Costs
- Lack of Capital
- Product Quality
- Faster Market Entry
- Lack of Expertise
- Facility Constraints
Startups and infant businesses often dont have the resources to manufacture their own products but with contract manufacturing they can still get their products manufactured. This allows these businesses to spend their money elsewhere rather than dropping hundreds of thousands of dollars on machinery and equipment.
Additionally, contract manufacturing can help companies maintain or increase production without increasing the cost of on site facilities. Lastly you will gain the knowledge and expertise of the contracted manufacturers thus giving you better quality products earlier on in the manufacturing process.
If your in-house facilities are unable to meet customer demands, consider using our contract manufacturing services.