By design, a contract manufacturing company exists to partner with an original equipment manufacturer to increase your production capabilities. However, there are some companies that insist on keeping all aspects of production in-house. Here’s an example of how that doesn’t always work:
What if you could turn your basement from a storage area into a fully-finished, useful set of rooms, with a movie screening room, exercise studio and a wet bar? That sounds amazing, right? Plus, you could handle some aspects of the construction, like the demo, painting and putting in a drop ceiling, right? You’ll save a few bucks by not having an experienced contractor handle all aspects of the project.
What you may soon discover is that your work is not up to par with the professionals. There are costs for materials you didn’t anticipate. Plus, it’s taking you longer than you planned to complete your portions of the job, and in the meantime, the contractor had to push your project back as they needed to get to other clients who were on time.
You thought saving a few bucks handling things — literally in-house — made sense, but in the long run, it ended up costing you more time and money. This happens quite a bit with OEMs that try to control all aspects of production under their roof, regardless of whether the task at hand is in their area of expertise or not. This is why we created a free, downloadable white paper that outlines the advantages of partnering with an experienced contract manufacturer.
Let’s highlight three cost and time savers that come from working with a contract manufacturer for some of your complex assembly services:
Operational Costs are Reduced
You may not realize it yet, but performing the component manufacturing at your site can actually impact your OEM operations. You need dedicated technicians and workspaces, which decreases the amount of floor space dedicated to your core production processes. A competent contract manufacturer like Axenics could provide tube bending, welding, and sub-assemblies manufactured at our site. Then, you can optimize your industrial space to focus on what you do best — creating end products for your specific industry.
Turn Key Solutions from A to Z
A well-chosen contractor could handle every aspect of the work, from initial design engineering to evaluating space requirements and project specifications, and prototyping services for plastic and metal components. This allows them to verify the work before moving to manufacturing and testing. By handling the entire project, you don’t have to worry about hidden fees, overlap with other contractors or extra overhead costs. You can be as involved or uninvolved as your manufacturing operation and manpower allows you to be. You want to be involved in the iterations involved in building your component or assembly? That’s great. You prefer to just receive a component that’s tested and meets all specifications and quality marks? That’s great, too.
Control the Cost of Staffing and Materials
Purchasing limited quantities of individual materials and shipping it to the contract manufacturer, only to have them ship it back to you will always cost more than buying materials in bulk and sending them to one destination. Utilizing your contract manufacturing company to handle all the tube bending, welding, cutting, brazing and other component fabrication can keep material costs down because they’re ordering in bulk and fulfilling orders based on your schedule.
Utilizing contract manufacturing allows OEMs to leverage a partner that has already made a significant investment into the research and development required to build and deliver a consistent, successful solution. Further, contracting the finished product can lower real costs if the direct and indirect expenses of outsourcing are lower than the costs of keeping the work in-house.
As is the case for many businesses, expanding your capacity without hiring staff or investing in capital equipment makes good business sense.