Contract Manufacturing in Central Wisconsin
Open up new avenues and compete in areas previously unreachable.
The What and Why of Contract Manufacturing
Contract manufacturing occurs when one business agrees with another to create components or goods over a particular time period. This is manufacturing outsourcing, and it, like employee outsourcing, allows businesses to compete in previously unattainable markets.
Contract manufacturing can assist organizations that lack the manpower, resources, or experience to manufacture the items they intend to produce, but it can also benefit those who possess many or all of these qualities. For example, outsourcing a metalworks project can result in even higher-quality products because the contract manufacturer is typically dedicated and specialized in this type of work. They may even have the resources and experience to complete the project quicker and at a higher quality than you could in-house.
This can also result in lower expenses. Rather than investing in the equipment, training, and other resources required to produce the component or product, you can hire another company to make it for you at a cost that is likely lower than if you took on the entire task. This allows you to keep overhead expenses low while increasing your return on investment (ROI), not to mention the resource and labor savings.
Another advantage to contract manufacturing is improved scalability. Contract manufacturers can open up opportunities for you to negotiate pricing on bulk raw materials and keep costs low even as production expands.
Types of Contract Manufacturing
There are quite a few different types of agreements between organizations that engage in contract manufacturing. However, the majority fall under these four categories:
Private Label Manufacturing
This sort of contract manufacturing involves the contractor delivering a finished product as stipulated by the corporation that engaged them. The goods can be transported to an inventory warehouse or directly to the store. Sometimes these products are the result of a combination of components. That’s a scenario where the components will be assembled before dispatch - a perfect partnership for firms with a defined product vision who want the benefits of outsourcing all production.
Individual Component Manufacturing
With individual component manufacturing, the contract manufacturer is responsible for producing one component that will be integrated into a larger, more complex end product. They are alone responsible for producing this component, which is one of many designed during the product development process. The corporation itself or other contractors will be tasked with assembling the component into the final product. This is a solution for businesses who have some in-house manufacturing capabilities but are unable to generate all of the components required for their finished product.
Labor or Service Subcontracting
In this case, the contract manufacturer is only active in one aspect of the wider process, acting more as a subcontractor than a general contractor. They are employed by a general contractor who need their specific skills. This is employed in the manufacturing of extremely complicated products, and contract manufacturers can assist by providing reduced costs and shorter production cycles.
End-To-End Manufacturing
As with private label manufacturing, the product or component is entirely outsourced. However, in this situation, the contract manufacturer is more active in the product design process and provides input to the product manager. As a result, the company that contracts with the contract manufacturer is not completely responsible for requirements, and the contract manufacturer handles much of the product design work. It's excellent for businesses who want to produce something quickly and inexpensively while maintaining quality.
Pilot Metals Contract Manufacturing
Contract manufacturing can be a winning combination for startups and small businesses that don’t have the resources or expertise to complete their entire manufacturing process in-house. It provides you with a strategy to get a foothold in the marketplace and compete with larger competitors without sinking all your resources into it.
Pilot Metals does contract manufacturing for various types of companies and would love to discuss your situation. Click the button below to get in touch and see how a contract manufacturer might be of benefit to you.
