The Importance of Contract Manufacturing
“Why would I want to hire a contract manufacturer when I’ve got 25 people on the floor who can do the job?”
The benefits of contract manufacturing for all tiers of original equipment manufacturers (OEMs) include:
- Increased in-house efficiency
- Faster company growth
- Added profitability
“Sure, that’s easy to say in a bulleted list, but how can contract manufacturing deliver those benefits to me and my company?”
Glad you asked. Each advantage to working with a longtime, reliable contract manufacturer can be applied to specific aspects of your business’ day-to-day operations and resource management. By partnering with a company like Axenics, your business can effectively erase many of the common risks associated with growth and success.
We thought it was such an important – and misunderstood topic — that we assembled a free resource on lowering costs with contract assembly services to give you a thorough overview as to how outsourcing more of your projects can prove to be a time- and money-saving solution for your manufacturing needs.
Cost Control of Materials and Staffing
Those unfamiliar with the contract manufacturing process might find the prospect of outsourcing important jobs to be a risky one. When working with new clients, we typically visit their facilities to help alleviate any concerns and assist in making the transition smoother. We do this by
working closely with your team to document the required work procedures for the project, discussing inventory requirements, packaging needs, etc.
By doing this, you are able to re-allocate your team and your production space to focus on higher-margin elements of your business. That frees up important time to increase profitability with contract manufacturing by concentrating on customer relationships, engineering, sales and marketing.
Letting a contract manufacturer manage the entire production operation and ship directly to the end user is the ultimate efficiency. A solid contract manufacturing partner has already made a significant investment into the research and development required to build and deliver a consistent, successful solution.
Imagine the enormous capital investment to set up manufacturing of new components at your facility. All those infrastructure costs — training, equipment, inventory — can disappear when working with a contract manufacturer skilled in turnkey solutions.
You will still dictate quality standards and a good contract manufacturer will follow strict procedures as specified to deliver high-quality products. Plus, a competent contract manufacturer can also help you identify potential problem areas in the product and spot potential risks during the process.
Growth with Contract Manufacturing
One benefit OEMs have discovered by partnering with contract manufacturers has been the opportunity to expand into international markets, because contract manufacturing is really expanding your capabilities. Plus, as your company grows, you don’t have to become an expert on every aspect of a new product. Contract manufacturing partners can make recommendations on component design and engineering, they can assist with decisions on the best materials to produce the components, and they can oversee the entire process on your behalf.
Utilizing a contract manufacturer to take over all aspects of non-core elements of your business will free time to expand into your existing marketplace as well. Think of it as operating a lemonade stand. The smart kid is not doing it all – making the lemonade, pouring the drinks, taking the money, etc. That enterprising kid is hiring the other kids on the block to handle those tasks while eyeing a second corner three blocks over to expand.
As with any relationship, open and clear communication is key to finding success with a contract manufacturing partner. From the outset, take the time to establish a transparent, valuable working partnership.
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