07 Aug A Contract Manufacturing Partner Creates More Value Than a Supplier
At its core service, every contract manufacturer exists to solve a cost, quality, and diversity problem for its customers. While these rarely change the business environment, challenges and demands continue to evolve. Changing to meet the new challenges of the market you support has simply become the new normal. These are some of the emerging trends we are seeing in contract manufacturing this year.
Impact of the Internet of Things
The tech and manufacturing world are abuzz with the Internet of Things (IoT). We’re not just talking consumer wearables, but the continued explosion of sensors monitoring machines and transforming all that data into predictive analytics. IoT makes the business of contract manufacturing more efficient, however challenges do arise: security of the data captured and a standardized platform to turn that data into business intelligence information. Customers want wearable data as much as factories are turning their production floors into a massive data collection tools to predict useful information like preventative maintenance. IoT will continue to dominate the manufacturing ecosystem for many years to come. Harnessing the power of the data collected and keeping it safe will be the challenge and top priority of contract manufacturers today.
Vendor Consolidation Needs
The greater the number of suppliers in any given market does not always guarantee lower costs and competitive savings. Despite the sophistication of software, better inventory management and greater turns of both raw materials into finished goods, vendor management can still be a never-ending time suck for many supply chain managers. Leading contract manufacturers are already having conversations with supply chain managers on what there is to do to reduce the number of vendors and to streamline their processes.
Finding a Partner
The major difference between a contract manufacturer being a supplier and a partner is simple: a partner creates more value than a supplier. Suppliers have lived on cost and relationships with their customer. While contract manufacturers who share a true partnership with their customers know that if you solve a problem for your customer, you become much more valuable to them than your competition. Future business growth depends on the ability to figure out how to shift from supplier to partner for your customers. With all the studies that state customer retention costs are far less than new customer acquisition costs, the time to pivot the relationship from supplier to partner is now.