Developing in-house manufacturing expertise is costly and time-intensive. Startups and mature companies alike should consider contract manufacturing to meet their needs.
Many executives wonder if contract manufacturing can integrate seamlessly into their strategic plan. What trade-offs will they make and what benefits can they expect in return?
With the right contract manufacturing company, there’s nothing to lose and everything to gain.
Again and again, contract manufacturing clients praise these advantages:
A manufacturing organization starts with capital.
You’ll need land and a facility, leaving you vulnerable to property taxes and real estate shifts. Your shop floor must be carefully planned, involving assumptions about equipment, personnel and workflow that may prove inaccurate. Each piece of machinery potentially costs millions.
That’s only the beginning. Total cost of ownership soars from there.
Payroll will take a big bite out of your profit margin – not to mention insurance covering your entire operation. A regulatory lapse or workplace accident can embroil you in massive liabilities.
Contract manufacturing externalizes these risks.
Capital, staffing and regulatory costs are absorbed by the manufacturing partner. Economies of scale let established contract manufacturers deliver excellent quality at a tiny fraction of the cost.
A manufacturing team isn’t just machine operators. You need supervisors, safety professionals, regulatory experts and project leaders. Each member of your team needs to be hired and trained, demanding expertise your existing HR organization might not have.
In-house manufacturing also subjects you to huge regulatory burdens. Site inspections and audits become the norm, especially if you want to attain the highest quality. The never-ending cycle of training and retraining lowers morale and increases turnover, stretching HR resources thinner.
The end result: Your company becomes a “jack of all trades” and master of none.
Diluting your core strengths leaves you at a disadvantage against entrenched competitors. With contract manufacturing, you can stay lean and focused, hiring only personnel you need to move your strategic goals forward. A streamlined business responds nimbly to changing conditions, and good contract manufacturing should let you turn on a dime.
To achieve consistent work, even skilled employees need the right policies and procedures. Before your first production day, weeks can go by architecting your day-to-day processes.
You know what happens then: Your plans run smack into real life.
A brand new manufacturing organization needs at least a year to reach consistent high quality. Output will be inconsistent and unreliable while lessons are learned and applied. This, of course, assumes they are being applied well.
Customers recognize that inconsistency, and your company will suffer – both in brand image and logistical challenges – as you have to accept returns and make things right.
A contract manufacturer should come ready with gold standard quality management standards already in place. ISO 9001:2015, the globally-recognized quality management certification crafted by experts at the International Organization for Standardization, is one example.
Not all contract manufacturers can live up to your expectations, so a rigorous selection process is essential. Done right, your manufacturing partner scales with you at every stage of commercialization, while providing simplicity, savings and peace of mind.