10 Impressive Advantages of Contract Manufacturing

Jan 6, 2023 | Contract Manufacturing, News

contract manufacturing

Contract manufacturing is vital to many manufacturers, particularly for startups and smaller companies with tighter budgets. Also referred to as subcontracting or outsourcing, the advantages of contract manufacturing are particularly noticeable for companies without large in-house development teams. For such companies, having an experienced third-party provider conduct certain processes is often better to enable greater efficiency in producing complex goods while maintaining product quality. 

Why is Contract Manufacturing Beneficial?

Companies that bring in contract manufacturers want to make production more cost-effective and efficient. The advantages of contract manufacturing are numerous, particularly for industries that require the specialized technical knowledge involved in the fabrication of complex components that require precision machining. The basics of a contract manufacturing agreement entail the assignment of production – either in part or as a whole – to a manufacturer, who follows design specifications to produce goods for a company that then sells them to end users.

1. Lower Overheads to Improve Competitiveness

Contract manufacturing lowers capital expenses so that a company will not need to invest in such things as expensive automated production equipment and raw materials and decreases operating costs like labor and maintenance. Smaller companies are often limited in both their resources and capabilities due to the high investment needed for the fabrication of precision products. For larger manufacturers, outsourcing allows them to concentrate on their core proficiencies. One of the prime advantages of contract manufacturing is the determination of costs upfront, making processes more efficient throughout production.

2. Provide Additional Technical Expertise

Another key advantage of contract manufacturing is the ability to provide additional workforce that is highly skilled and well-trained. The best contract manufacturers bring a wealth of experience to the production process and have an intimate understanding of every aspect of fabrication for which they have been hired. For example, this may include sourcing materials for components, and using their knowledge about the application for which a component will be used to follow the most advantageous processes. 

Contract manufacturers also provide the businesses with whom they partner technical insights that cannot be found elsewhere. Since CMs build products for a versatile selection of companies, they have valuable, in-depth knowledge of products built for various market niches. When choosing such a partner, a business should ensure the contract manufacturer has plenty of experience within the industry and the required certifications to serve the intended market.

3. Improve Quality Control

Your contract manufacturing partner should have robust quality control procedures, allowing you to leverage their existing quality systems and certifications to ensure your products are of the finest quality. The long lead time to develop quality systems and gain certifications is an incredible benefit to using a contact manufacturer because it gives you a step up in the process, resulting in a high-quality product with minimal time-to-market (TTM).

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Quality management doesn’t just occur during fabrication, either. An experienced partner can prevent fatal errors before they go into production by being able to spot potential design flaws early, thus saving time, money, and resources.

4. Focus on Core Capabilities

Outsourcing allows a business to focus on its core capabilities, freeing employees to design innovative prototypes, improve existing designs, or concentrate on developing new markets. This, in turn, furthers production goals while improving efficiency. Through better management of materials, costs, and time-to-market, businesses can optimize their production processes, which helps reduce labor, assembly, packaging, shipping, and other costs. Whatever the reason for outsourcing, it allows a manufacturer to do what they do best by outsourcing what others can do better elsewhere.

5. Existing Production Infrastructure & Training

An established contract manufacturer already has the tools, equipment, and well-trained engineering team to support a manufacturer’s production processes, reducing time-to-market (TTM). Whether these processes involve complex machining, advanced automated processes, or detailed tasks done by hand, the advantages of contract manufacturing come from the existing production infrastructure and years of experience, particularly since new production equipment can have one or more years of lead time. 

6. Reduce Costs

Relying on a manufacturing partner lowers the costs of design, fabrication, logistics, quality control, training, and other aspects of production. This inevitably leads to higher returns on investment.  Another advantage of contract manufacturing involves how resources are used. Lean manufacturing techniques typically used by contract manufacturers reduce waste. This contributes to cost savings and greater efficiency while promoting sustainability and reducing a company’s carbon footprint.

7. Reduce Direct Reliance on Labor

When a company manufactures its products from start to finish, it requires a sufficiently sized workforce. Skilled personnel with the necessary expertise are needed for product design, operations and maintenance of specialized machinery, and management to coordinate the work of all these employees. Utilizing the services of a contract manufacturer allows a business to benefit from a larger, more experienced labor force without all the hassles involved in hiring, training, managing payroll, and scheduling employees. Additionally, a long learning curve often involves onboarding new employees and getting them up to speed. In today’s labor market, a rotating door of employees is common, and bringing new staff takes time and money.

8. Expedite Time to Market

Working with an experienced contract manufacturer allows businesses to develop prototypes more rapidly, ensuring products are brought to market more quickly. This gives companies that utilize contract manufacturing a competitive edge. Contract manufacturers understand the cost and the time it takes to manufacture a specific part or product. This ensures that customers receive detailed cost estimates and timetables, lowering the possibility of increased costs and unexpected delays during production.  

9. Provide Industry-Specific Answers to Challenges

An experienced contract manufacturer will have extensive experience in certain industries, offering expertise that enables effective solutions. For example, a contract manufacturer experienced in the aerospace industry can fill gaps in knowledge that allow the development of innovative designs and processes for such components.

10. End-to-End (E2E) Solutions

Contract manufacturers like Staub Precision Machine, Inc. provide end-to-end solutions, offering services for every stage of the manufacturing process. This includes product design, material procurement, product assembly, packaging, and distribution. Eliminating as many middle layers as possible to optimize performance and efficiency. This allows your organization to have predictable production deadlines. Stay competitive and profitable, allowing your organization to focus on its core skills and competencies. Using a single entity throughout simplifies the process, decreases time to market, and increases product quality.

The Staub Advantage: Expert Contract Manufacturing

Staub Precision Machine, Inc. offers years of training, experience, and expertise to take your project from start to finish. In addition to precision machining, we have expansive capabilities, which include in-house engineering, design for manufacturing and engineering (DFMA), multiple assembly locations, finishing services such as assembly and rubber/silicone/plastic molding, packaging services, logistics operations, inventory, and warehouse facilities. We can also source quality electronics and components from reliable offshore sources.

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The advantages of contract manufacturing with Staub go beyond just our experience. Our company exists as much more than a supply chain vendor; we partner with companies to make them more efficient and their processes more effective. With a New York-based team, all projects are produced within the U.S. and meet the high-quality standards of American-made products, including AS9100 certification and OSHA’s NRTL (Nationally Recognized Testing Laboratory) standards. Our domestically-based customer service department and all-American workforce offer better accessibility to customers within the United States and Canada. Contact us today for more information on the advantages of contract manufacturing with Staub and how you can leverage our advanced, world-class manufacturing processes to improve your bottom line.