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Pros and Cons of Contract Manufacturing

by Last updated Nov 29, 2020 | Published on May 7, 2019Contract Manufacturing

Estimated Reading Time: 4 minutes

Growing your market share with the addition of a new product is every manufacturer’s primary goal, right? The phrase “growing pains” exists for a reason, though. Change can be challenging for your team. If you are considering using a contract manufacturing company to address your pain points for a new project or an existing one, this post aims to highlight the pros and cons of outsourcing.

Let’s address the pros first.

You gain the expertise of their team

You signed a deal to produce a new device. Now, you have to train your in-house technicians before you begin production. OR, you can utilize the skills of a contract manufacturer that already has an existing staff of highly-skilled workers.

By partnering with a company that has proven production practices in place, your business can effectively leverage their existing industry knowledge, labor force, equipment and facility space, which will result in overall time and cost savings for you.

When you are working with an established contract manufacturing company, you don’t have to hire folks and ramp up skills for a new production project that may or may not be long-lasting. Outsourcing that work means you are only obligated for the duration of a mutual agreement with the contractor.

Their investment is your gain

By choosing to outsource aspects of a project, you leverage a partner that has already made a significant investment into the research and development required to build and deliver a consistent, successful solution.

A contract manufacturer already has the space needed to produce your components, eliminating your need to increase production capabilities in-house. All aspects of that project can be produced by using the equipment and machinery of your chosen contract partner, leaving your precious floor space available for other needs.

Your cost drops; your profits rise

An established contract manufacturer is always looking at ways to be cost-competitive without lessening the quality of the final product.

For example, Axenics has nurtured relationships with many raw product vendors, and that is a benefit they can share with you once you are partnering on a project together. As a lean manufacturer, Axenics’ premier goal is to keep costs low without sacrificing quality, which means you’re receiving the highest-quality components at a lower investment.

(Go ahead and shop around, but you will likely find that the cost for Axenics’ core areas of expertise are extremely competitive.)

Axenics’ entire operation is optimized for lean manufacturing. The facilities are designed to complete almost every aspect of production in-house, making it a one-stop shop. With 35 years of expertise in cost-saving strategies, there are cost efficiencies that can be passed on to you.

All of these outsourcing pros can grow your profit potential, so let’s look at the cons:

You have less control over the product

The concept of contract manufacturing means you are dependent on another company to produce a complete system or a component for one of your systems, meaning you are not 100% in control of the production.

Taking a project or a portion of a project off of your production team’s hands and passing it to another company is generally the main concern when entering into a contract manufacturing agreement. You are reliant on someone else to produce quality results, while also delivering the project on time and on budget.

However, at the outset, if you clearly communicate your production procedures and specifications with a reliable contract manufacturer, you can maintain a strong level of control over the process. By establishing guidelines at the beginning, there will be less need to manage their portion of your project, with the assurance that your components will meet your quality standards.

Your product is not their priority

A contract manufacturer has several partners and projects running concurrently. How do you know that your project is going to be delivered on your schedule and to the quality that you expect? Again, a clear and open line of communication from the beginning is a best practice. Establish deadlines for samples, testing and a finished product.

A top contract manufacturing company consistently provides top-notch service every time to every customer in an effort to improve their reputation and to earn continuing business. They know competition is stiff these days, and keeping customers satisfied is the only way to remain viable.

At Axenics, we go one step beyond just telling you we are the best contract manufacturing partner, we prove it. Generally, our business relationships begin with a single order or a prototype order. One delivery from us will show our commitment to quality and service, let you hold our component or assembly in your hands, let you implement it – and finally see it in action.

You have concerns about quality

You are depending on another company to create a component that will go into your new device. How do you know that their contribution will stand up next to your established quality? Ask about a potential partner’s quality assurance processes.

For example, Axenics has a quality rating of 99.7%. Our goal it to deliver top-quality results for every project. Our commitment is to give our customers nothing short of excellence.

A common theme arises when looking at the potential cons in working with a contract manufacturer: communication. Clear and open communication with a contract manufacturing partner such as Axenics can quickly turn these things you thought of as cons into pros.

If you’re looking to learn more about the benefits and misconceptions of contract manufacturing, we’ve got you covered.

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