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Engineering Value ThruContract Manufacturing
The Benefits of a Successful Partnership with a Contract Manufacturer
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Introduction
As the world of manufacturing grows more complex,
and logistics become more challenging than ever,
many organizations are exploring the advantages of
partnering with a contract manufacturer. Contract
manufacturing, also known as outsourcing, consists
of hiring a third-party to perform functions that
organizations may not have the time, space, equipment,
or expertise to handle in-house. In certain scenarios,
a contract manufacturer can become an integral part
of an organization’s operating strategy by delivering
turnkey manufacturing solutions.
In this eBook we explore the benefits of a successful
relationship and how selecting the right contract
manufacturer can help to lower costs, provide flexibility,
utilize expertise, and improve focus.
Companies often choose contract manufacturing for a few primary reasons, all of which make it easier, less expensive and more efficient to bring new products
to the market and distribute them broadly.
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Cost Savings
Contract manufacturing is an advantageous
outsourcing procedure that keeps business and
overhead costs low. Because most contract
manufacturers offer “one stop shopping” to
organizations, those organizations are then freed
from the capital investment, personnel, and other
costs associated with keeping these functions
in-house.
By partnering with a contract manufacturer that
already knows the manufacturing process, you can:
• Save on capital expenses such as facility and production equipment.
• Save on labor costs such as wages, training, and benefits.
• Significantly lower your operating expenses.
• Allocate your saved funds towards your unique value and core competencies.
• Have access to more cost-effective sourcing.
• Reduce regulatory requirements and costs.
• Eliminate liability on import/export policy errors.
Most importantly, the cost savings can be passed
along to your customers which will help you gain
a competitive edge in the marketplace. Lowering
the price for customers will, in the end, mean more
sales for you.
In some scenarios, contract manufacturing has been able to cut down on labor costs by 20-30%
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Flexibility
The decision to partner with a contract manufacturer is
made due to the flexibility it affords. This flexibility not
only improves the operations of an organization, but it
can also have a positive effect on the bottom line.
By partnering with a contract manufacturer,
organizations can seamlessly scale their operations
in response to market demand. This means that no
matter the level of demand, they will always be able to
meet your customers’ needs. This, in conjunction with
having the ability to easily break into new markets and
change priorities/schedules in response to any issues,
ultimately puts organizations who utilize contract
manufacturers in the position to outmaneuver their
competitors. Additionally, contract manufacturers
allow organizations to be more financially flexible. By
freeing up funds which would otherwise be reserved
for capital investments (i.e.: facilities, machinery),
organizations can now divert money to sudden,
high-priority needs.
By partnering with a contract manufacturer, organizations can cut down their time to market; saving anywhere from 12 to 24 months.
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Expertise
Most of the time when a business is successful, it is
likely attributed to product performance, and that
is something that should never be compromised.
Therefore, when deciding to design and manufacture
a product, it makes perfect sense to partner with a
company that has experience and expertise – both of
which a reputable contract manufacturer will have.
Contract manufacturers naturally build up and preserve
a vast pool of knowledge. This knowledge spans from
knowing which material would be most efficient to
understanding – thru their various relationships –
which suppliers and methods will best meet product
timelines without jeopardizing any engineering, quality,
or logistics. Additionally, as the industry is seeing,
modern manufacturing requires plenty of technical
knowledge to function smoothly. Outsourcing to a
contract manufacturer enables you to leverage the
latest technologies which will ultimately lead you to
providing better service to your customers without
incurring the hassle and costs of making expensive
technology upgrades.
The expertise of a contract manufacturer will ensure that you do not make critical mistakes that cost time, money, and possibly the integrity of your product(s).
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Focus
It is important that every business plays to its
strengths. For this reason, many organizations turn
to contract manufacturing. By partnering with a
contract manufacturer, organizations free themselves
up to focus on their strengths and core competencies;
ultimately allowing for high-level efficiency and
productivity.
By partnering with a contract manufacturer your
organization can:
• Focus your attention on core innovation, strategic
planning, and other principal business activities.
• Keep from getting bogged down in the minutia of
manufacturing (i.e.: parts management, purchasing
and maintaining machinery, balancing schedules).
• Have access to relationships that offer cost-savings
and an understanding of how to enter a market that
may otherwise have been prohibitive.
• Concentrate on functions that drive revenue.
• Make your company leaner and more competitive:
When time is freed up, so is money.
Outsourcing the manufacturing of these items can allow you and your team to focus on bringing new products to market that meet your customers’ current needs.
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Closing
Organizations should view contract manufacturers
as business value multipliers. The combined benefits
of cost savings, operational flexibility, increased focus
on core business values, and access to vast industry
knowledge produce a compelling business option for
companies looking to manufacture their product(s).
It is important to note, however, that while contract
manufacturers provide many advantages, these
advantages can be offset if you choose the wrong
partner. Choosing the right contract manufacturer can
be a long and arduous process. There are many factors
to consider. Therefore, be sure to take care to consider
all the relevant aspects before settling on a partner.
When researching potential partners, be sure to
consider and have in-depth conversations about the
following factors:
• Capability
• Experience & Qualifications
• Capacity
• Personnel
• Equipment and Technology
• Location
• Financial Stability
(800) 951-0071(973) 263-1700
[email protected] panova.com
33 Jacksonville RoadTowaco, NJ 07082
With locations in New Jersey and Shanghai — Panova is an
expert in the manufacturing of molded components and bonded
assemblies and provides engineering support services for product
development. Customers work with Panova to source custom
and standard rubber, plastic and metal components.
Our established supply chain, expertise in materials and
manufacturability, and responsiveness make it easy for
you to realize the cost benefits of outsourced production,
while still getting the product quality and availability you
need to run your business.
For more information on how your organization can engineer
value thru contract manufacturing, please visit www.panova.com
or contact us at (800) 951-0071.
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