5 Important Factors To Consider When Evaluating Contract Manufacturing Bids

When you’re looking for a contract manufacturer to produce your auto parts, immediately selecting the lowest bidder is a mistake you definitely don’t want to make.

Often times, the lowest bid doesn’t include all the services you require. For example, it’s common for a low-bidding manufacturer to exclude the quality control and assurance process from their bid. It’s an exclusion that may end up costing you even more money in the long run because you’d need on-site engineers, a stringent process in place, and a comprehensive auditing system set up in order to take care of quality assurance in-house. Also, beware of low bidders who offer limited quality assurance because you’d still have to pick up the slack.

Evaluating contract manufacturing bids is a task that should not be taken lightly. There are many factors to consider while reviewing a bid, including the services offered, customer service, quality assurance, contingency plan, and supply chain.

Here are some important questions to ask while reviewing a bid:

1. Can The Bidder Deliver On ALL Aspects Of The Contract?

Like any purchase or investment, it’s wise to look at all aspects of the contract when evaluating bidders. Price is important, as are manufacturer experience, the ability to conduct business onsite, IP safeguards, financial stability, and more. While communicating with a manufacturer, be sure to ask them a lot of questions. Here’s a good, comprehensive list of important questions to ask them to ensure that they have the experience, professionalism, and stability to work well with your company.

2. What Kind Of Customer Service Will The Bidder Provide After The Contract Is Signed?

Customer service is a big concern in contract manufacturing, especially when working with manufacturers that are half a world away. You will be constantly communicating with the manufacturer, whether it’s to address a production problem, ask a question about a delivery, request a change, or something else. Communication between you and the manufacturer has to be smooth and simple. Otherwise, the contract will be a source of constant frustration.

3. How Is Quality Managed, From Raw Materials To Packaging And Everything In Between?

Quality is a process. It starts with inspecting raw materials, and ends with correctly packaging the finished product for shipment. At every step in between, the best manufacturers have a documented, reliable process to ensure quality. That documentation should be reviewed, and staff should be able to answer questions about the process. A good manufacturer will also keep you in the loop regarding any issues cropping up during the quality assurance process.

4. What Does The Bidder’s Contingency Plan Look Like?

What happens if things go wrong? There’s no expecting the unexpected. Still, you can at least attempt to game plan problems and solutions by asking questions about contingency plans:

• What if raw materials are delayed or rejected over quality concerns?
• What if outgoing shipping is completely stopped, due to weather or some similar type of emergency?
• What if your company has a client past due on payment and has a major cash flow problem?
• What if there’s a labor problem? A problem with electricity? A major problem that closes a major roadway in or out of the facility?
• What if a major part of the line fails?

These are questions that the best manufacturers have already considered and strategized. Asking them shouldn’t throw anyone off.

5. How Long Is The Supply Chain?

Considering that longer supply chains have more risk than shorter supply chains, it’s worth considering the supply chain length when evaluating bids. A part that’s a few pennies cheaper – but that has to come from 12,000 miles away – might not be a better “deal” than a part that’s a few hundred miles away. Long supply chains can fail more spectacularly than short supply chains, and when that happens it can be weeks or months before things are back on track.

Make Sure Everything Is In The Contract

Let’s say you find a contract manufacturer that gave you perfect answers to all of the questions listed above. Don’t be so quick to celebrate just yet. You have to ensure that all of these factors are adequately addressed in the contract, which is the single most important document in the whole deal between both parties.

This guide will show you what details to look for in the contract to ensure that it’s ironclad.