Three Key Benefits Of Outsourcing To A Contract Manufacturer

Wondering how outsourcing to a contract manufacturer can benefit your business, as opposed to building your own facility or partnering with a manufacturing company? Here are three reasons to consider contract manufacturing carefully before making any big investments.

1. Lower Up-Front Cost And Financial Risk

Outsourcing to a contract manufacturer saves you money in a variety of ways.

• Less capital intensive – Whether you’re launching a new product line, expanding an existing line, or scaling down, contract manufacturing is the least capital intensive way to go about making these types of changes. That frees up capital for some other part of your business.
• Minimal risk – Investing in a facility, equipment, and a workforce is a major commitment. If the economy changes, your investment is considerably exposed. In a contract manufacturing situation, the manufacturer holds most of the risk and you are free to audit their work when necessary.
• No investments in know-how – There are a lot of hidden costs in manufacturing. It’s not enough to go out and hire an experienced staff to run your production line. Whenever production starts up, there are a lot of little production lessons that have a cost. The same goes for figuring out logistics, licensing, regulations, etc. These costs are hard to quantify, but they are not trivial. You don’t have to worry about them if you contract.
• No unexpected expenses – When you contract manufacturing, your contract manufacturer absorbs the cost of unexpected circumstances. If a major shipping company goes bankrupt and disrupts operations, if an earthquake hits, if a stamping press suffers a catastrophic failure, and so on – none of these expenses will impact your company’s bottom line.

Finally, contract manufacturers in Mexico (like Intran) benefit from low labor costs, which can help reduce overall costs considerably.

2. Clarity Of Purpose

There’s a truism in business that bears repeating: Do what your company does best, and outsource the rest. Or, put another way, focus on your core business (clarity of purpose) and let other companies with specific expertise tackle non-core activities.

Put simply, quality manufacturing is challenging. Getting “good” at manufacturing takes considerable effort. Our company has been around a long time, we know how to manufacturer a variety of components and assemblies, and our expertise is what has made us one of Mexico’s premier contract manufacturers. This is something we’re proud of, because our status was earned the hard way.

We couldn’t be the company we are today if we had decided to focus on “other” businesses along the way. We’ve always been a manufacturing company, and we probably always will be. That’s our purpose, and that clarity is a big part of what makes us contract manufacturing experts.

3. Quality And Speed To Market

Manufacturing quality comes down to processes and people. It takes time to develop both, which is why contract manufacturers almost always outperform manufacturing start-ups in terms of quality. It’s hard for a brand new team at a brand new facility to match the performance of a finely tuned manufacturing system at a company like Intran.

Additionally, quality is directly related to speed to market. A production process that’s right the first time makes it much easier to get your product to market at scale. A pre-production run that identifies 27 different quality issues (for example) will force not only revisions to the production process, but often design changes. This is a problem due to a lack of experience, and it can lengthen the time it takes to bring a product to market by several months.

Experienced contract manufacturers can:

• Review production plans and processes
• Identify trouble areas before production takes place
• Implement procedures or work out changes to address problems before they’re problems
• Source quality materials
• Get it right the first time

Experience is the key here, particularly experience with a wide variety of industries and products.

Summing Up

Contract manufacturing offers a lot of financial benefits, and for that reason, a lot of companies investigate this option carefully. However, the benefits of contract manufacturing are not merely financial. Contracting out manufacturing allows your company to focus time, effort, and energy on innovation.

Without a doubt, time is the most precious resource in business. Contact us today to see how our contract manufacturing services can help your company save time.