Article | December 10, 2021
The benefits of contract manufacturing are triggering manufacturers to utilize it as a strategy to speed up production and increase revenue. According to BCC Research, the worldwide contract manufacturing industry should increase from $2.0 trillion in 2018 to $2.7 trillion in 2023, a 6.7% CAGR.
Given the growing demand, contract manufacturing has a long way to go in innovating new solutions for manufacturers.
As technology takes over and enhances many of the processes we used to handle with manual labor, we are freed up to use our minds creatively, which leads to bigger and better leaps in innovation and productivity.
– Matt Mong, VP Market Innovation and Project Business Evangelist at Adeaca
Let us look at the benefits and concept of contract manufacturing, often known as manufacturing partners in some circles.
Contract Manufacturing: Concept and Benefits
Contract manufacturing is a business model in which a company agreeswith a contract manufacturer to make components or finished goods based on the hiring company's design. In short, it is a business model in which one company hires another company to manufacture components or goods for them or their products.
The following are some of the primary advantages of contract manufacturing that attract manufacturers to adopt this concept and find a trusted supplier to manufacture any product or part of their product without much difficulty.
Cost Efficiency: In contract manufacturing, companies do not have to pay for the facility, equipment, or labor needed.
Resource Allocations: The money and resources saved through contract manufacturing can be redirected towards other company operations.
Faster Lead Times: Hiring a contract manufacturer reduces manufacturing time. This improves market speed, delivery time, and customer service.
Quality Control: Contract manufacturers are likely to have their own quality control processes in place, which allow them to spot counterfeit or damaged products early on.
Advanced Skill Sets: Companies can benefit from the skills they may not possess, but the contract manufacturer does.
Contract Manufacturing Examples
Here are some examples of contract manufacturing companies that offer manufacturing services to other businesses and work on full-service outside manufacturing projects.
Example 1: Kimball Electronics Group
Kimball Electronics Group provides a comprehensive range of electronics manufacturing services, including engineering, prototyping, testing, electronic data interchange (EDI), new product introduction, and repair depot services. Soldering, assembly, reflow, de-paneling, flux application, inspection, screen printing, testing, and rework are all processes used in their manufacturing.
Example 2: Scapa Healthcare
Scapa Healthcare, headquartered in Knoxville, Tennessee, provides contract manufacturing services for medical and cosmetic products. Their portfolio of products includes sunscreen, silicone medical adhesives, and innovative materials. Additionally, the organization provides development, packaging, and logistics services.
Things to Consider While Selecting a Contract Manufacturing (CM) Partner
You need to know how to identify the ideal contract manufacturer for your business to accelerate production and produce high-quality items. Below, we've listed some of the most important things to keep in mind while looking for an outsourced manufacturing partner for your company.
Understanding a contract manufacturer's (CM) capabilities in terms of logistics and fulfillment is critical. Is your potential CM able to meet shifting product demands? How to use the CM's services? You may need one or more services from CM for your product, so always examine their capabilities or develop a list of their services and see which ones are valuable for you.
Knowledge or Prerequisite
A qualified, experienced, subject matter expert CM always correctly understands the requirements and delivers the services as per expectations and within the time frame specified in your production schedule. Always inquire about their qualifications or certificates in the places where your product will be manufactured.
Any contract manufacturing plan must have an agreement or compliance clause. Always inquire about the compliance procedure and thoroughly understand the terms and claws to avoid future issues.
Verify your possible contract manufacturer's personnel count. Is it easy to talk to them? Is labor skilled enough to meet the product's goals? It is critical for large-scale production and production, requiring swift responses. Any work force shortage might cause production delays.
Gear & Expertise
Check for machines and equipment as well as human labor in your possible CM. Many CM lease equipment to complete a project. So always check how the CM will organize the essential equipment for your project. Expertise in using the equipment is also necessary. Verify which machines were used and whether or not professionals were involved.
The CM's location is the main factor to check. Because the CM may have numerous plants, knowing which plant is assigned to your product is essential to knowing every aspect of its production. Also, the assembly location must allow you to visit and inspect the manufacturing between cycles.
Finding a reliable contract manufacturer with solid financial backing and market roots is essential to avoid market scams. However, you must also analyze and solve risk factors like equipment failure, supplier capacity, and unreasonable expectations.
Selection Myths of Contract Manufacturing Partner
Once you've produced a list of shortlisted contract manufacturing partners who meet all of the criteria described in the preceding heading, you can proceed by following the steps below to select the best contract manufacturing partner.
Look for Who is Willing to Invest in Your Business
Incorrect. The objective is to find a vendor prepared to manufacture at a loss. A contract manufacturer's strength is that they can stay competitive and make a profit for both parties.
Focus on Tier 1 CM Partners from the Market
This one is indeed not acceptable. Tier 1 is a financial phrase used to separate large corporations from smaller ones. You want a contract manufacturer who understands your business and your needs. Don't worry about the manufacturing partner's size.
Go Ahead with the One Who Offers the Best Services at the Lowest Price
Trying to get the cheapest quote isn't always the best idea. You should get a quote from your contract manufacturing partner, but the quote may not always reveal the complete story. Cost per unit frequently captures approximately 75% of total supply chain cost. Some contract manufacturers charge the OEM the remaining 25%. Consider the complete picture while selecting a CM partner.
Manufacturers use contract manufacturing to meet their commercial goals. Therefore, contract manufacturing is a win-win situation for both industrialists and contract manufacturers. Finding the proper contract manufacturing partner for your company is not straightforward, but our brief guide can help you identify the right manufacturing partner.
What makes a good contract manufacturer?
The most significant contract manufacturing firms are more than just supply chain partners. They recognize and treat your items as if they were their own, are meticulous in their operations, and are concerned with quality and capital.
What differentiates contract manufacturing from outsourcing?
A contract is a legally binding arrangement. It involves two or more parties. For example, outsourcing is outsourcing some tasks to an outside organization under a contract agreed upon by both parties.
What's the difference between contract manufacturing and licensing?
Contract manufacturing only outsources production phases, while licensing is far more complex. In return for fees, a corporation sells the right to utilize its intellectual property to another company. Licenses are like franchises.
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"text": "The most significant contract manufacturing firms are more than just supply chain partners. They recognize and treat your items as if they were their own, are meticulous in their operations, and are concerned with quality and capital."
"name": "What differentiates contract manufacturing from outsourcing?",
"text": "A contract is a legally binding arrangement. It involves two or more parties. For example, outsourcing is outsourcing some tasks to an outside organization under a contract agreed upon by both parties."
"name": "What's the difference between contract manufacturing and licensing?",
"text": "Contract manufacturing only outsources production phases, while licensing is far more complex. In return for fees, a corporation sells the right to utilize its intellectual property to another company. Licenses are like franchises."
Article | July 27, 2021
Filmmaking is manufacturing. To date, no one has made the direct correlation between the two. As many entertainment professionals know, the budget gap between indie productions and big studio blockbusters continues to grow. The day of mid-budget, independent (indie) movies is disappearing as fast as the middle class in the American economy. According to newbiefilmschool, the average budget is barely at $2 million for these pictures and producers have been forced to adapt by discovering creative ways to decrease costs, while maintaining a high production values for a sophisticated audience with high expectations.
Though there are many ways to cut costs, any business professional will agree to go with the options that bring down the budget the most. Just as dog is man’s best friend, here are three reasons why manufacturers have become the same for a filmmaker by saving money and time for every type of production.
Film equipment manufacturers
No long may a film lack quality in picture, sound, and bad acting. Once acceptable, these older movies were produced with the technology and film equipment constraints and from limited funding. Film equipment manufacturers from cameras, sound equipment, and computers cost less to achieve high production values. Film equipment companies face increasing competition, which has driven down the purchase price. Better equipment with significant technology improvements has reframed the indie film industry with high-level sound and image capture quality.
The transition of cameras from film to digital was a notable shift for manufacturers. Many industry-insiders believe that digital is free, and film is expensive, but there is more the manufacturing construct. Digital cameras, when compared to film cameras in the same market price bracket, are much more expensive than analog counterparts. It is true that film costs money and is single-use. Digital memory cards are relatively expensive and can be reused. Film also needs to be developed and there is a cost associated with that production cost. There are other ways in which digital modalities save filmmakers.
Across all industries, efficiency always wins. Innovative manufacturers have developed machines to make numerous jobs easier for everyone. Machines have been assisting filmmakers since the invention of the camera. AI (artificial intelligence) is poised to change film even more and continues to augment human creativity. Storytellers work with computers during every process of creating a motion picture which has sped up the time it takes to complete each-step in film making.
Automating pre-production processes, such as creating a budget and writing a script, is analogous to an ERP (enterprise resource planning) software for a traditional manufacturing operation. The Movie Magic budgeting software by Entertainment Partners has made creating a budget more efficient and accurate. Screenwriter programs vary from the downloadable Final Draft, and the purely cloud based, Celtx, are the reasons automated scriptwriting is the norm. These programs also automatically format writing to industry standards, facilitating the creative process.
Automation in post-production is equally advanced through editing software for video, sound, effects, and colors all the way to distribution and promotional content. Editing footage from digital rather than film saves time and money. Industry favorites include Adobe Premiere Pro and Apple’s exclusive Final Cut Pro and are used on almost all well-known movies and TV shows.
The impacts of COVID-19 on entertainment manufacturers
Without question, the pandemic has affected every industry by creating an unanticipated production standstill. Entertainment manufacturers have sacrificed countless productions, lost billions of dollars, and major talent agencies have furloughed hundreds of employees. This negative impact is not just difficult for indie filmmakers, big studios are suffering just as much with production delays and cancellations still happening as this article goes to press.
Any way back to the set is better than no set at all. A new necessity for productions to safely reopen includes epidemiologists and other public health specialists; they provide detailed strategies dealing with large crews who work in cramped spaces, makeup artists who get face-to-face with actors who kiss, hug, and fight on set. These COVID-19 consultants rely on the manufacturing industry for PPE supplies and carry out regular PCR tests. Face coverings and hand sanitizing stations have also become the norm, just like most other manufacturing operations.
Article | May 13, 2021
When the manufacturing industry began to embrace digital technology a decade ago, it adopted a new identity — smart manufacturing or Industry 4.0. Applying cloud, automation, analytics, machine learning and big data to production operations created a connected ecosystem for manufacturing and supply chain management, and became a high-growth market. At the start of 2020, the sector was on track to grow into a market worth more than $300 billion in the coming five years.
Then the pandemic hit. By spring, millions of workers had lost their jobs. Some plants closed temporarily or slowed production so workers could spread out to maintain a safe distance from one another. Investment in smart manufacturing fell too, by 16 percent between March and April alone. Some researchers predicted that such a pull-back would dampen investment through 2025.
But the conversations we’ve had with C-suite manufacturing executives and service providers suggest investment in smart manufacturing will intensify. By 2025, it could be worth more than $400 billion. It’s no wonder.
Article | October 27, 2021
Technologies in the manufacturing industry are upscaling daily. Manufacturers are keen to embrace the latest manufacturing trends to improve their manufacturing process, total production rate, and product quality at their factories. Manufacturing technology advances have also boosted production speed while retaining product quality.
“As technology takes over and enhances many of the processes we used to handle with manual labor, we are freed up to use our minds creatively, which leads to bigger and better leaps in innovation and productivity.” – Matt Mong, VP Market Innovation and Project Business Evangelist at Adeaca.
Apart from manufacturing technology developments, we will look at new manufacturing business trends in this article, which will help you achieve maximum customer engagement and a positive relationship with your target consumer groups.
So, let's see some of the top manufacturing business trends that are assisting the industry in improving its business processes.
Manufacturing Business Trends: 2022
Manufacturers must adopt a business procedure that focuses on the target consumer group. Also, incorporating social responsibility and technology into company procedures would be beneficial.
Here are five ways manufacturing leaders are becoming more communicative and results-oriented in their manufacturing and consumer experience strategies.
Deliver a One-of-a-kind Digital Experience
Every industry's target demographic is now online. Manufacturers must use digitalization to interact with their target consumer group to be noticed and remembered. Maintain an active presence on all popular digital platforms used by your target demographic. Post your new products, business strategy, or get genuine customer feedback on your brand and products. Engage your target audience and keep them informed of your progress in making their lives easier.
“Marketing is VERY important to any company, although I generally see it being justified by the number of web hits or ‘leads’ that come in” – John Hays, Director of Sales at BALYO
Allow your clientele to interact with your products digitally. To be a part of the new digital revolution in any industry, create a new digital business model.
Initiative for Ecosystem Partnership
An ecosystem partnership is a network of enterprises working together to provide a product or service to meet changing market needs. A partner ecosystem can generate customer-ready solutions faster. It also helps firms to co-create value. This value is demonstrated in extraordinary customer and partner experiences. The B2B ecosystem partners work together to bring mutual benefits to their companies.
Revenue Generation via Data Monetization
Data monetization allows industrial CIOs (Chief Information Officers) to monetize their digital products and services. Rapid digitization in manufacturing generates massive data. CIOs may monetize and distribute data across ecosystems. CIOs can leverage information as a resource to generate new services or business models. This ensures revenue even when external reasons like supply chain issues or human resource shortages interrupt the firm.
Using the Equipment as a Service (EaaS) Approach
EaaS, or Pay-Per-Use, is defined as: A business model where equipment is rented rather than sold, with remote diagnostics and predictive maintenance solutions offered by the vendor.
Using Eaas reduces capital expense, improves data reliability, and lowers operating costs. As a result, producers can undertake all production-related tasks with precision.
Bosch RexRoth CytroBox – a Perfect Example of EaaS
The global equipment-as-a-service market is estimated to develop at an 11.5 percent CAGR from 2021-2027. (OpenPR)
The RexRoth Cytrobox from Bosch is an example of EAAS. This hydraulic power unit converts electrical power into hydraulic fluid pressure and flow to move and force a machine. They are widely utilized in presses and tooling equipment.
It can handle up to 33 kW in a small space. Its exceptionally flexible; its unique design allows it to run efficiently and quietly. In addition, modern automation and sensor packages allow easy integration into modern machine designs.
Benefits of Bosch RexRoth CytroBox
It provides data insights during the long lifecycles
Using this hydraulic power unit on a lease can save a lot of money which cost $100.000
It requires heavy maintenance cost as per its type of usage that can be avoided with the EaaS approach
Shifting the Emphasis from B2B to B2C
Many firms are moving their attention from B2B to B2C to understand their target consumer better. This new strategic approach helps producers identify market needs and gain real-time feedback on their products. This method helps producers increase profit margins while also controlling the product's interaction with the intended audience.
The latest manufacturing trends will take you to the cutting edge of manufacturing. The manufacturing developments in 2022 will boost the total manufacturing market in the coming years, allowing manufacturers to generate more business revenue.
What is the manufacturing industry's future?
Industry 4.0 is rapid technological progress in production and is transforming the worldwide manufacturing industry. According to bccresearch's market research, the global manufacturing and process control market is predicted to increase from $86.7 billion in 2020 to $117.7 billion in 2025, a CAGR of 6.3 percent.
What is the industry 4.0 technology in the manufacturing industry?
IoT, industrial internet of things (IIoT), Cyber-physical systems (CPS), cloud computing, artificial intelligence, big data, machine learning, robotics, virtual reality, augmented reality, and additive manufacturing or 3D printing are some technologies that are used in industry 4.0 factories.
What are the current technology trends in the manufacturing industry?
AI, robots, 3D printing, and the like are all the latest manufacturing trends in manufacturing technology. Additionally, enterprise resource planning (ERP), cloud computing, and machine vision all play a significant part in advanced manufacturing.
"name": "What is the manufacturing industry's future?",
"text": "Industry 4.0 is rapid technological progress in production and is transforming the worldwide manufacturing industry. According to bccresearch's market research, the global manufacturing and process control market is predicted to increase from $86.7 billion in 2020 to $117.7 billion in 2025, a CAGR of 6.3 percent."
"name": "What is the industry 4.0 technology in the manufacturing industry?",
"text": "IoT, industrial internet of things (IIoT), Cyber-physical systems (CPS), cloud computing, artificial intelligence, big data, machine learning, robotics, virtual reality, augmented reality, and additive manufacturing or 3D printing are some technologies that are used in industry 4.0 factories."
"name": "What are the current technology trends in the manufacturing industry?",
"text": "AI, robots, 3D printing, and the like are all the latest manufacturing trends in manufacturing technology. Additionally, enterprise resource planning (ERP), cloud computing, and machine vision all play a significant part in advanced manufacturing."