Why You Should Know How A Contract Manufacturer Sources Raw Materials Before Signing With Them

When shopping around for a contract manufacturer, there are several factors to consider. Among the most important ones is how the contract manufacturer sources raw materials.

The Importance Of Understanding How Your Contract Manufacturer Sources Raw Materials

Steel manufacturing

It’s common for contract manufacturers to be in charge of sourcing raw materials. It’s a pretty big responsibility because the quality of the raw materials plays a large role in the overall quality of your parts. Also, who the manufacturer sources from is important too. If the supplier is constantly late on delivering the raw materials, your bottom line suffers as a result.

So when you’re looking for a contract manufacturer, it’s always a good idea to find out how the contract manufacturer is going to:

  • Source raw materials
  • Verify the quality of the raw materials
  • Handle a late shipment or a shipment of inferior quality materials

The best way to find out the above information is to ask the contract manufacturer a bunch of pointed questions.

Good Questions To Ask A Contract Manufacturer About How They Source Raw Materials

By asking the following questions, you should get a good idea of how the contract manufacturer sources raw materials, verifies the quality of the raw materials, and handles any unforeseen circumstances:

  • How do you vet your raw material suppliers? What metrics or criteria is your company using to find good suppliers?
  • Do you already have suppliers in place for the materials we need, are you going to have to find new suppliers?
  • If you already have a supplier for the raw materials we need, can you tell me how often the materials arrive on time? Can you also tell me how often the supplier meets or exceeds the quality standards?
  • Speaking of quality standards, what are they, and what is your test procedure?
  • If a raw material supplier is behind schedule and a shipment is late, what is the procedure? If a shipment of raw material isn’t up to quality standards, what is the procedure?
  • What happens if there is a shortage of a raw material? What happens if there is a large price increase of a raw material?
  • Do you forecast raw material supplies and costs? If so, can you share those forecasts with me? And if your forecasts call for a price increase or shortage, what is your procedure?
  • What validation do you provide as far as raw material size, form, and specifications go?
  • Do you have documentation for all of the procedures you’ve described?
  • Will you provide raw material quality assurances in our manufacturing agreement?
  • Will you guarantee a supply of the raw material in case of a late shipment or temporary shortage?
  • Will you provide raw material price and availability forecasts on a regular basis?

An experienced contract manufacturer should be able to answer these questions without issue. An inexperienced or low quality contract manufacturer will find these questions difficult or impossible to answer.

Most contract manufacturers are unwilling to name their suppliers before entering into an agreement. But, they still should have processes and procedures in place to address all of the concerns listed above.

Covering The Raw Materials In Your Contract

Agree contract

You may find a contract manufacturer that was able to answer all of your questions and furnish the documents you requested. If so, you want to put all of their assurances into the supply agreement. Make sure the manufacturer outlines all of their procedures and assurances in the agreement.

You also want to include a bill of materials in the agreement. This ensures that the supply manufacturer doesn’t switch to inferior quality materials for any reason. Here’s a good source on the key parts to cover in your manufacturing contract.

February 22, 2019 Tagged: