Contract Manufacturing allows companies to establish a turn-key operation to better streamline production and order fulfillment. Outsourcing manufacturing operations of an assembly or product, allows a company to concentrate on their core competencies, accommodate growth or manage a shift in strategy.

Savings
Partnering with a Contract Manufacturer can produce potential savings of 10-30 percent in production costs. The savings are realized from a number of factors including inventory reduction, reduced operational costs, relief from equipment burden, and eliminated facility costs.

Benefits
Contract Manufacturing typically has longer purchasing agreement periods, generally 1 to 3 years, that allow both the manufacturer and their suppliers to better plan and manage production and stocking programs. Using Estimated Annual Usage (EAU) forecasts allows the manufacturer to level production demand which in turn leads to better supply chain management and more consistent on-time delivery.

Added Value
Because Contract Manufacturers should be viewed as an extension of the OEM, value added support systems can be easily implemented. Systems such as assuming responsibility for engineering documents, managing an entire supply chain, providing finished goods, as well as coordinating returnable packaging and shipping can relieve the pressure of manufacturing and allow the OEM to concentrate on core competencies and fulfilling customers’ needs.

Learn more about the value of Contract Manufacturing.