Home > Resources > Articles > How to Find a Suitable Contract Manufacturing Partner?

How to Find a Suitable Contract Manufacturing Partner?

Bhagyashri Kambale | December 10, 2021 | 1166 views
MANUFACTURING_PARTNER
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

 

Concept

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.


Benefits

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.

 

Competency

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.

 

Compliance

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.

 

Workforces

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.

 

Whereabouts

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.

 

Business Stability

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.

 

Final Words

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.

 

FAQ

 

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.

Spotlight

Rexel USA

Millions of US electrical customers trust the expertise, resources and relationships of Rexel Holdings USA. As the US presence of one of the world's largest electrical distributors, the Rexel Group, we apply our know-how, productivity tools and hands-on business-building initiatives to help our customers thrive.

OTHER ARTICLES

Achieving Interoperability in an Industry 4.0 Factory

Article | February 11, 2020

As a part of the Industry 4.0 movement, factory engineers are increasingly adopting some form of industrial Ethernet to interconnect the machines and other equipment implementing their production processes. Ethernet has been around in multiple forms for over 40 years. Most of it serves the IT community by interconnecting PCs and other equipment to a company LAN. Because of its flexibility, Ethernet has been adapted to many industrial uses.

Read More

The Impact of Coronavirus on Electronic Manufacturing

Article | February 11, 2020

Wuhan, the epicenter of the outbreak, is considered a crucial hub in the middle of China, a place of high importance for the production of automobiles, electronics, optics, and fiber optics. Wuhan and surrounding cities in the Hubei province are currently on a government-imposed quarantine at a scale the world has never seen before, some Chinese officials have referred to the situation as warlike.

Read More

Digitalizing Your Manufacturing Ecosystem

Article | February 10, 2020

Making digitalization work for you requires an understanding of your manufacturing ecosystem. Standards - such as ISA-95 - only guide you on a journey to more deeply comprehend the workings of your unique process for manufacturing your products. A batch manufacturing ecosystem often includes campaign management. Campaign management is not mentioned in ISA-95, which only speaks generally of order processing.

Read More

4 Food and Beverage Manufacturing Trends on Tap for 2020

Article | February 10, 2020

It’s the food and beverage industry’s job to appeal to consumer tastes by keeping tabs on what’s hot and what’s not. In the 1990s, for instance, fat free or reduced fat was all the rage, evidenced by the variety of products with such descriptions featured in bold typeface on cartons, cardboard and boxes. Fast forward to today, thanks in part to advancements in nutrition science, fat is back and is recommended in low-carb diets such as Atkins and Keto.

Read More

Achieving Interoperability in an Industry 4.0 Factory

Article | February 11, 2020

As a part of the Industry 4.0 movement, factory engineers are increasingly adopting some form of industrial Ethernet to interconnect the machines and other equipment implementing their production processes. Ethernet has been around in multiple forms for over 40 years. Most of it serves the IT community by interconnecting PCs and other equipment to a company LAN. Because of its flexibility, Ethernet has been adapted to many industrial uses.

Read More

The Impact of Coronavirus on Electronic Manufacturing

Article | February 11, 2020

Wuhan, the epicenter of the outbreak, is considered a crucial hub in the middle of China, a place of high importance for the production of automobiles, electronics, optics, and fiber optics. Wuhan and surrounding cities in the Hubei province are currently on a government-imposed quarantine at a scale the world has never seen before, some Chinese officials have referred to the situation as warlike.

Read More

Digitalizing Your Manufacturing Ecosystem

Article | February 10, 2020

Making digitalization work for you requires an understanding of your manufacturing ecosystem. Standards - such as ISA-95 - only guide you on a journey to more deeply comprehend the workings of your unique process for manufacturing your products. A batch manufacturing ecosystem often includes campaign management. Campaign management is not mentioned in ISA-95, which only speaks generally of order processing.

Read More

4 Food and Beverage Manufacturing Trends on Tap for 2020

Article | February 10, 2020

It’s the food and beverage industry’s job to appeal to consumer tastes by keeping tabs on what’s hot and what’s not. In the 1990s, for instance, fat free or reduced fat was all the rage, evidenced by the variety of products with such descriptions featured in bold typeface on cartons, cardboard and boxes. Fast forward to today, thanks in part to advancements in nutrition science, fat is back and is recommended in low-carb diets such as Atkins and Keto.

Read More
MORE ARTICLE

Spotlight

Rexel USA

Millions of US electrical customers trust the expertise, resources and relationships of Rexel Holdings USA. As the US presence of one of the world's largest electrical distributors, the Rexel Group, we apply our know-how, productivity tools and hands-on business-building initiatives to help our customers thrive.

Related News

MANUFACTURING TECHNOLOGY

Arendai and AiQ robotics Announce New Partnership to Provide a Single-Point Solution of Heterogenous Orchestration and Robotics

Newswire | May 29, 2023

The partnership will enable the companies to expand their services into the rapidly growing industry 4.0. By combining Arendai's cutting-edge solution, Harmony, with mobile robotics from AiQ robotics, the partnership will develop advanced and intelligent solutions for a diverse range of use cases, giving a significant competitive advantage in the market. "We are excited to announce our new partnership with leading robotics company, AiQ robotics," said Walter Buga, CEO of Arendai. "We believe that the combination of simulation, AI and robotics has the potential to revolutionize operations for many verticals, and we are thrilled to be at the forefront of this innovation." In the field of robotics solutions and automation, nearly every application is characterized by individual and unique conditions. A strength of the new partnership is the ability to provide a joint customizable, flexible, and interoperable solution to any use-case. The partnership between Arendai and AiQ robotics is expected to have a significant impact on logistics and smart manufacturing. "I am convinced that AiQ robotics' products and extensive experience, completed by Arendai's Harmony software integration capabilities, gives a great and innovative boost to the autonomous intralogistics market," said Przemysław Degórski, Founder of AiQ robotics. "Customers will be able to take advantage of a complete robotic integration solution. Our target is to deliver an easily deployed system for production and warehousing good transportation." The companies aim to leverage their expertise in artificial intelligence in the optimization of intralogistics processes and in collaboration with human intelligence. Arendai and AiQ robotics will have a joint exhibit at the MODERNLOG fair in Poznan, Poland, from May 30-June 2. The partners will demonstrate the integration of Arendai's software orchestration solution and a mobile robot from AiQ robotics with game-changing navigation capabilities, including the use of QR codes and SLAM. About Arendai Arendai Inc. is a pioneer in the delivery of innovative software management solutions for the orchestration of logistics centers and the intralogistics operations of smart factories. By applying simulation, digital twin, and AI, Arendai delivers optimal orchestration of heterogeneous AMRs and robotics solutions. Arendai has excellent, engaged ecosystem partners with a focus on solving real customer problems and producing an attractive ROI. About AiQ robotics AiQ robotics company was founded on the basis of extensive experience gained in the robotics and automation market in the field of measurements, electric motors, motor accessories, controllers, control, complete solutions and commissioning. Customers can take advantage of ready-made products, as well as robotics and automation components enabling the construction of highly sophisticated and innovative projects.

Read More

MANUFACTURING TECHNOLOGY

ARCH Cutting Tools Acquires Cape Coral, Florida based Company, VR Wesson

Prweb | May 29, 2023

ARCH Global Holdings LLC Company announced the acquisition of VR Wesson, a manufacturer of standard and special inserts, tool holders, and milling cutters located in Cape Coral, Florida. The company will join ARCH Cutting Tools, a division of ARCH and industry-leading, American manufacturer of solid round and indexable metal removal tooling. ARCH Cutting Tools is headquartered in Bloomfield Hills, Michigan, and serves the medical, aerospace, defense, automotive, energy, agriculture, and general industrial markets. ARCH Cutting Tools has facilities across the Eastern United States and is dedicated to engineering high-performance standard and custom tools that increase efficiencies for end-users. VR Wesson will be consolidated into ARCH Cutting Tools – Orchard Park and will expand the company’s existing insert offering via ARCH Specials, as well as our North American Carbide and Ultra-Dex legacy brands. “ARCH Cutting Tools is proud to announce the acquisition of VR Wesson, whose advanced manufacturing technologies and key accounts will be consolidated into our Orchard Park, New York facility,” said Robert Gralke, President of ARCH Cutting Tools – Orchard Park. “We are particularly excited to bring laser PCD finishing capabilities under our roof, which will increase our team’s efficiencies and expand our product offering to key industries, including automotive and medical.” About ARCH Cutting Tools ARCH® Cutting Tools Corp., an ARCH Global Holdings LLC Company (ARCH) based in metro Detroit, is an industry-leading, American manufacturer of solid round and indexable metal removal tooling. As a mid-sized, full-service company, ARCH Cutting Tools leverages the collective capabilities of its facilities to engineer a wide array of high-performance standard and custom tooling. ARCH Cutting Tools combines the expertise of leading American manufacturing professionals and expanding technologies to serve the medical, aerospace, defense, automotive, energy, agriculture, and general industrial markets.

Read More

ADDITIVE MANUFACTURING

NUBURU Delivered First Units Under Partnership with Essentium in Additive Manufacturing for Metal Industrial Parts

Businesswire | May 31, 2023

NUBURU, Inc., a leading innovator in high-power and high-brightness industrial blue laser technology, today announced that multiple units were delivered to Essentium, a worldwide leader in industrial additive manufacturing (AM). In May 2022, Essentium and NUBURU jointly announced a multi-year, multi-million-dollar agreement to develop and manufacture a blue laser-based metal AM platform. The deliveries announced today signify the initial execution of this agreement. Essentium expects strong growth across new applications and markets as a result of this technology integration. NUBURU has begun delivering and Essentium has begun integrating NUBURU’s proprietary blue laser technology with its High Speed Extrusion (HSETM) 3D Printing technology. The new AM platform is designed to deliver breakthrough throughput for extremely high part quality and broad-scale use in major industrial markets, including automotive, aerospace, and defense. Dr. Mark Zediker, CEO and Co-Founder of NUBURU, said, “We are excited to have delivered our first units to Essentium, and we look forward to delivering additional units over the course of 2023 and the coming years.” Essentium launched EPOD (Essentium Parts on Demand), an in-house production service using its HSETM 3D printing technology in March 2023. The service offers fast and cost-effective production of parts at scale and access to Essentium's open AM ecosystem of solutions. NUBURU is excited to support Essentium's growth through partnerships with existing additive manufacturing service providers and manufacturing marketplaces. “NUBURU's unparalleled expertise and leadership in blue laser technology have been instrumental in advancing our cutting-edge 3D printing platform. The arrival of the latest units this year and our partnership with NUBURU will help us continue to drive innovation in the AM industry,” said Elisa Teipel, Ph.D., Chief Technology Officer and co-founder of Essentium. Essentium is also leveraging access to NUBURU’s intellectual property related blue laser technology, including patents granted in the United States, Japan, China, and South Korea. About NUBURU Founded in 2015, NUBURU, INC. (NYSE American: BURU) is a developer and manufacturer of industrial blue lasers that leverage fundamental physics and their high-brightness, high-power design to produce faster, higher quality welds and parts than current lasers can provide in laser welding and additive manufacturing of copper, gold, aluminum and other industrially important metals. NUBURU’s industrial blue lasers produce minimal to defect-free welds that are up to eight times faster than the traditional approaches — all with the flexibility inherent to laser processing. For more information, please visit www.nuburu.net.

Read More

MANUFACTURING TECHNOLOGY

Arendai and AiQ robotics Announce New Partnership to Provide a Single-Point Solution of Heterogenous Orchestration and Robotics

Newswire | May 29, 2023

The partnership will enable the companies to expand their services into the rapidly growing industry 4.0. By combining Arendai's cutting-edge solution, Harmony, with mobile robotics from AiQ robotics, the partnership will develop advanced and intelligent solutions for a diverse range of use cases, giving a significant competitive advantage in the market. "We are excited to announce our new partnership with leading robotics company, AiQ robotics," said Walter Buga, CEO of Arendai. "We believe that the combination of simulation, AI and robotics has the potential to revolutionize operations for many verticals, and we are thrilled to be at the forefront of this innovation." In the field of robotics solutions and automation, nearly every application is characterized by individual and unique conditions. A strength of the new partnership is the ability to provide a joint customizable, flexible, and interoperable solution to any use-case. The partnership between Arendai and AiQ robotics is expected to have a significant impact on logistics and smart manufacturing. "I am convinced that AiQ robotics' products and extensive experience, completed by Arendai's Harmony software integration capabilities, gives a great and innovative boost to the autonomous intralogistics market," said Przemysław Degórski, Founder of AiQ robotics. "Customers will be able to take advantage of a complete robotic integration solution. Our target is to deliver an easily deployed system for production and warehousing good transportation." The companies aim to leverage their expertise in artificial intelligence in the optimization of intralogistics processes and in collaboration with human intelligence. Arendai and AiQ robotics will have a joint exhibit at the MODERNLOG fair in Poznan, Poland, from May 30-June 2. The partners will demonstrate the integration of Arendai's software orchestration solution and a mobile robot from AiQ robotics with game-changing navigation capabilities, including the use of QR codes and SLAM. About Arendai Arendai Inc. is a pioneer in the delivery of innovative software management solutions for the orchestration of logistics centers and the intralogistics operations of smart factories. By applying simulation, digital twin, and AI, Arendai delivers optimal orchestration of heterogeneous AMRs and robotics solutions. Arendai has excellent, engaged ecosystem partners with a focus on solving real customer problems and producing an attractive ROI. About AiQ robotics AiQ robotics company was founded on the basis of extensive experience gained in the robotics and automation market in the field of measurements, electric motors, motor accessories, controllers, control, complete solutions and commissioning. Customers can take advantage of ready-made products, as well as robotics and automation components enabling the construction of highly sophisticated and innovative projects.

Read More

MANUFACTURING TECHNOLOGY

ARCH Cutting Tools Acquires Cape Coral, Florida based Company, VR Wesson

Prweb | May 29, 2023

ARCH Global Holdings LLC Company announced the acquisition of VR Wesson, a manufacturer of standard and special inserts, tool holders, and milling cutters located in Cape Coral, Florida. The company will join ARCH Cutting Tools, a division of ARCH and industry-leading, American manufacturer of solid round and indexable metal removal tooling. ARCH Cutting Tools is headquartered in Bloomfield Hills, Michigan, and serves the medical, aerospace, defense, automotive, energy, agriculture, and general industrial markets. ARCH Cutting Tools has facilities across the Eastern United States and is dedicated to engineering high-performance standard and custom tools that increase efficiencies for end-users. VR Wesson will be consolidated into ARCH Cutting Tools – Orchard Park and will expand the company’s existing insert offering via ARCH Specials, as well as our North American Carbide and Ultra-Dex legacy brands. “ARCH Cutting Tools is proud to announce the acquisition of VR Wesson, whose advanced manufacturing technologies and key accounts will be consolidated into our Orchard Park, New York facility,” said Robert Gralke, President of ARCH Cutting Tools – Orchard Park. “We are particularly excited to bring laser PCD finishing capabilities under our roof, which will increase our team’s efficiencies and expand our product offering to key industries, including automotive and medical.” About ARCH Cutting Tools ARCH® Cutting Tools Corp., an ARCH Global Holdings LLC Company (ARCH) based in metro Detroit, is an industry-leading, American manufacturer of solid round and indexable metal removal tooling. As a mid-sized, full-service company, ARCH Cutting Tools leverages the collective capabilities of its facilities to engineer a wide array of high-performance standard and custom tooling. ARCH Cutting Tools combines the expertise of leading American manufacturing professionals and expanding technologies to serve the medical, aerospace, defense, automotive, energy, agriculture, and general industrial markets.

Read More

ADDITIVE MANUFACTURING

NUBURU Delivered First Units Under Partnership with Essentium in Additive Manufacturing for Metal Industrial Parts

Businesswire | May 31, 2023

NUBURU, Inc., a leading innovator in high-power and high-brightness industrial blue laser technology, today announced that multiple units were delivered to Essentium, a worldwide leader in industrial additive manufacturing (AM). In May 2022, Essentium and NUBURU jointly announced a multi-year, multi-million-dollar agreement to develop and manufacture a blue laser-based metal AM platform. The deliveries announced today signify the initial execution of this agreement. Essentium expects strong growth across new applications and markets as a result of this technology integration. NUBURU has begun delivering and Essentium has begun integrating NUBURU’s proprietary blue laser technology with its High Speed Extrusion (HSETM) 3D Printing technology. The new AM platform is designed to deliver breakthrough throughput for extremely high part quality and broad-scale use in major industrial markets, including automotive, aerospace, and defense. Dr. Mark Zediker, CEO and Co-Founder of NUBURU, said, “We are excited to have delivered our first units to Essentium, and we look forward to delivering additional units over the course of 2023 and the coming years.” Essentium launched EPOD (Essentium Parts on Demand), an in-house production service using its HSETM 3D printing technology in March 2023. The service offers fast and cost-effective production of parts at scale and access to Essentium's open AM ecosystem of solutions. NUBURU is excited to support Essentium's growth through partnerships with existing additive manufacturing service providers and manufacturing marketplaces. “NUBURU's unparalleled expertise and leadership in blue laser technology have been instrumental in advancing our cutting-edge 3D printing platform. The arrival of the latest units this year and our partnership with NUBURU will help us continue to drive innovation in the AM industry,” said Elisa Teipel, Ph.D., Chief Technology Officer and co-founder of Essentium. Essentium is also leveraging access to NUBURU’s intellectual property related blue laser technology, including patents granted in the United States, Japan, China, and South Korea. About NUBURU Founded in 2015, NUBURU, INC. (NYSE American: BURU) is a developer and manufacturer of industrial blue lasers that leverage fundamental physics and their high-brightness, high-power design to produce faster, higher quality welds and parts than current lasers can provide in laser welding and additive manufacturing of copper, gold, aluminum and other industrially important metals. NUBURU’s industrial blue lasers produce minimal to defect-free welds that are up to eight times faster than the traditional approaches — all with the flexibility inherent to laser processing. For more information, please visit www.nuburu.net.

Read More

Events

3DPrinting2023

Conference

3DPrinting2023

Conference