There are many ways to begin building a product, but if you don't plan on building capacity in house, you'll need to find a contract manufacturer (CM) right away. A CM can make your product, manage your supply chain and help you get to market faster. But with so many CMs out there, how do you choose which one is right for you?
What is a contract manufacturer?
Contract manufacturing is the process of outsourcing a company's manufacturing to another manufacturer who handles the actual production of the product. In a few words, what are contract manufacturers? They are:
- Third-party manufacturers hired by a company to produce products on their behalf
- Specialize in manufacturing and production processes for various industries such as electronics, pharmaceuticals, food and beverage, cosmetics, and more
- Provide expertise in production, sourcing of raw materials, quality control, and packaging
- Help companies streamline their supply chain and reduce overhead costs by outsourcing production
Contract manufacturers are quickly growing in popularity, and many people have misconceptions about what they are and what they do. The most common of those misconceptions are:
- They only work with large companies: Contract manufacturers cater to companies of all sizes, from startups to multinational corporations.
- They don't provide customization: Contract manufacturers can often provide customization options for products to meet the specific needs of their clients.
- They compromise on quality: Contract manufacturers are typically well-equipped with quality control measures to ensure that products meet the required standards.
- They are expensive: While there may be upfront costs, contract manufacturers can often help reduce long-term costs by leveraging their expertise and economies of scale.
- Their clients have no control over the production process: Contract manufacturers work in close collaboration with their clients, providing transparency and communication throughout the production process.
Steps to choosing a contract manufacturer
Decide what your deal breakers are
To make sure you're choosing a contract manufacturer who's right for your company, you need to be clear about what you're looking for.
First, consider the most important characteristics of your product or service—is it top-quality? Or does it just have an amazing story? Are your products made from natural materials? Is there an element of luxury that should be reflected in their appearance and construction? Do they need to be portable, durable, or biodegradable?
Next are the characteristics of your business—how large is it? How successful has it been so far? What kind of growth do you expect over time? Do you plan on selling directly to consumers or through retailers like Amazon or Walmart (or a combination of both), or are you selling complex parts to another manufacturer to build into a final product? Finally, think about what's most important to both sides: the working relationship between the two parties involved.
Where do you find contract manufacturers?
There are many ways to find a contract manufacturer. The first place you should check is within the resources available to your business sector. Trade shows and industry events are great places to meet with potential partners and get your questions answered by people who understand your needs as an entrepreneur. You may also want to look online for manufacturing companies or electronic parts suppliers that service your area and navigate to the right CM from there. If there aren’t any local options available, reach out through trade associations in other parts of the country or even overseas. If you work with any other service providers (like Amplio, who provides risk forecasting for electronic components), in-house experts should also be able to point you in the right direction.
Invite bids from multiple companies
Whether you’re looking for electronic component manufacturers in USA or electronic component manufacturers in India, when you're ready to choose a manufacturer, the best way to get started is by inviting bids from multiple companies. While this is sometimes a time-consuming process, it's important that you don't cut corners when it comes to selecting the right contract manufacturer for your business.
Make sure each company has all of your contact information on file so they can reach out to you directly with any questions they may have about your product or order specifications. You should also request samples of their previous work and review these samples carefully before making a decision about who will produce your product(s).
If there are several manufacturers in the running, ask them if they can offer an introductory discount on future orders or give special rates for smaller initial batches (if applicable). And don't be afraid of asking for extras! If one contract manufacturer offers free shipping while another doesn't include it in their quote—and both quotes are competitively priced—go with whichever company offers free shipping since this could save thousands over time as more products roll out through production cycles every year.
Ask for samples of work
When you're selecting electronic components manufacturers, you should ask for samples of their work. If they're able to produce quality products, they'll have no problem showing you some examples of their previous projects.
When looking at sample projects from your potential electronic component suppliers, there are a few things to consider:
- The type of project should be similar or exactly the same as your own. This will show how fast they can work through changes and issues that may come up during production.
- The quality should be high—not just good enough for customers but also good enough for you! You want an excellent product at all times because it means less trouble down the road when selling it to customers or having them return items due to defects or errors on your part (which isn't cheap).
- It must be finished according to your requirements (e.g., color matching, labeling etc.). This tells us whether or not this company takes pride in its work and will do whatever is necessary so everything turns out right!
Make sure that you're comfortable with your choice of contract manufacturer before moving forward.
In order for your contract manufacturer to be successful and have a good working relationship with you, it's important that you're comfortable with them. You should feel that they're going to handle your product and business in a way that makes sense for both of you, which means making sure they can meet your specific needs. If there are any issues or concerns, the contract manufacturer will be able to help resolve them quickly and efficiently.
Be sure to answer some key questions about your company before moving forward:
- What is bill of materials in manufacturing for your company?
- What are your jobs of supply chain management?
Logistic and supply chain management depends on choosing the right contract manufacturer.
While it can be tricky to choose your first contract manufacturer, there are some important things to keep in mind. First, remember that a good relationship with your supplier is the most important thing. You want someone who cares about your product as much as you do. This will ensure a high-quality product and timely deliveries. Next, look for a supplier that has experience in the industry you're working in or has worked with other companies like yours before so they understand what makes for an effective partnership. Finally, make sure you've got a few options when it comes time to negotiate pricing because not all suppliers will have the same rates!