Stay Lean – Outsource to Contract Manufacturing Firm
In today’s contact, advantages of outsourcing manufacturing activities to a contract manufacturing firm is easily recognized by most business sector. Industries such as electronics, semiconductor, marine, consumer products, pharmaceuticals, biotech, automotive and etc are highly dependent on the services of contract manufacturing firm.
Contract Manufacturing Process
Let’s take a look at the process in the form of a simple example. Suppose Company A , the original equipment manufacturer (OEM) is a High End Vision Inspection machine manufacturing company. Obviously, Company A would have a long list of Bill of Material (BOM) and a huge stack of drawing which detail the specification, brand ,part number, quantity, supplier information and other technical information of each parts and components that would need to be assembled to create the end product, a high end complex vision inspection machine. So, instead of sourcing stocking, manufacturing, assembly, testing and packing by in-house employees. Company A would hire the services of Company B to perform certain functional activities.
Company B, being a a contract manufacturing firm, would be asked to supply manufacture and assembly a specific type of sub-assembly units, panel wiring, junction box, wire harness and etc. Since Company B has all the necessary resources and know-how to provide service such as panel wiring, box build, sub-assembly, wire harness and etc. It build upon this expertise to honor the order. Essentially, by outsourcing these activities Company A can focus on its key competence in the area of product research and development (R&D) , marketing, distributions and etc rather than spreading its resources in additional manufacturing infrastructure.
Contract manufacturing concept has gained increasing popularity all across the world. With the increase in market competition, it has become absolutely necessary for the hiring firm to focus on their core competencies rather than trying to do everything by themselves This provide a space whereby the contract manufacturing company comes in to fulfill that need. The contract manufacturing company sign a legal manufacturing contract with the hiring firm. It commit to ensures that the required production parameters and deadlines are all followed and the end product will deliver the same quality as those manufactured by the hiring firm. Most often then not, the contract manufacturing company detail will not be make known to the end user.
Taking Automation Industrial as an example, , there are several different services that can be expect from a contract manufacturing service provider. For example, they may provide services such as global sourcing and purchasing, sub-assembly work, wire harness, box build, panel wiring, material localization, integration, final assembly and many more.
Contract Manufacturing Firm Selection
While outsourcing your manufacturing activities to a contract manufacturing company, it is very important to check if your chosen contract manufacturing partner follow ISO 9001 standards to ensure quality control and is BizSafe certified to confirm to the safety of the workplace and personal health of every personnel working under them. With the increase in OEM company wanted to operate leaner, it has opened up numerous new opportunities for contract manufacturing firms and there are many such players in the market today. However, only a few are professional, hence it is a necessity for the hiring firm to select wisely.