Contract manufacturing is a global business concept wherein an original equipment manufacturer outsources the production of a particular product to another company.For example,though Nokia manufactures mobile phones,it doesnâEUR(TM)t manufacture every phone component in-house.It contracts firms from different parts of the world to manufacture specific parts such as the body or the touch screen.There are hundreds of such major brands that outsource part manufacturing to reputable contract manufacturers.
The most obvious advantage of this process is that a company doesnâEUR(TM)t need to invest in setting up manufacturing units for each component it needs.Secondly,by outsourcing the manufacturing process to emerging economies,the costs can be significantly cut.The third aspect is that the staff of the OEM can focus better on research,development and marketing related activities.
As a process,contract manufacturing is rather popular in business sectors such as electronics,pharmaceutical products,apparel,and cosmetics.Contract manufacturers can offer services such as plastics injection molding,metal stamping,box build projects,printed circuit board assemblies and much more.Components such as cable assemblies can also be outsourced to a contract manufacturer.There are several cases where not just a single component,but the entire product is manufactured by a third party and is sold under the OEMâEUR(TM)s brand name.
Before entering into such a business partnership,it is imperative to draft a lucid and detailed agreement that clearly sets down the terms of doing business.There have been cases where companies have suffered losses because their chosen contract manufacturers did not adhere to quality standards or did not deliver products on time.
Here are a few examples of the processes that can be outsourced to a contract manufacturer:
- Plastics injection molding:This procedure is used for manufacturing seamless plastic parts or products.A few examples could include plastic bottles,CPU or cell phone bodies,casings etc.
- Cable assemblies:These are bundles of wires or cables that have been bound using ties,straps,terminals etc.A cable assembly makes wiring less complicated.
- Metal stamping:This process involves using high amounts of force to cutting the desired shape into a sheet metal.There are several different presses and laser-based machines that can be used for this purpose.
- Printed circuit board assemblies:A printed circuit board comprises a board that is made from a non-conductive material and its surface is etched with a dense network of conductive tracks that carry signals.
While these are just a few examples,there are several other types of services offered by contract manufacturing firms.Choosing firms that follow industry best practices and other environmentally sensitive manufacturing processes are preferred.This would ensure that the product being manufactured can meet or exceed the expectations of the end consumer.
