Major Advantages of Contract Manufacturing

Major Advantages of Contract Manufacturing

Contract manufacturing is defined as the outsourcing of certain production activities and is generally used to manufacture some or all components of a product. Also known as outsourced manufacturing, there are major advantages of using contract manufacturing in the supply chain. Most firms choose to outsource their production to a contract manufacturing company for one of the following reasons:

Reduced Cost. A major advantage of contract manufacturing is that it is significantly less expensive to work with a contract manufacturing company than it is to build your own facility. Rather than spending money to build the physical location, hire and train a workforce to run the facility, and then handle packaging and shipping logistics, hire a contract manufacturer and invest those dollars elsewhere. Spending that money on marketing, sales development, etc, will allow for faster business growth, over investing in the establishment of a manufacturing plant.

Industry Expertise. There’s certain knowledge of a process that only comes with time and experience, and rather than learning the best way to do something for your own product, lean on the expertise from manufacturers that have been in business a long time. They will know which materials, processes, and even designs work best, to avoid mistakes that will cost you in both time and money. Contract manufacturers will often have teams that can assist you with not just the production, but also in choosing which design elements and additional factors need to be considered for cost and quality of the final product.

Quality. When you work with a contract manufacturer, you’re working with a specialist who has honed their specific skills and processes. You’re able to deliver a higher level of quality in your products, because you are sourcing from a niche supplier. Instead of trying to create quality over several different platforms and mediums within your own business, using contract manufacturing allows you to produce a premium product, but sourcing from those who have already perfected the production process.

Increased Flexibility. Another advantage of using contract manufacturing is the added flexibility that comes from their facilities. You are able to design, test, and refine your product without having to change your entire manufacturing facilities. This flexibility and responsiveness is hard to achieve when you’re starting out on your own and are creating just one or two specific products.

When you’re bringing a new product to market, there is much work to be done. From concept, to research and development, to production and sales, it’s easy to be as overwhelmed as you are excited. Choosing to use contract manufacturing to take some of those hard decisions off your plate can be the difference between costly mistakes and a profitable business. Lean on the expertise, quality, and flexibility of a contract manufacturer, and you’ll see reduced costs, in both money and in precious time.