Getting the right level of performance from your Contract Manufacturing (CM) partner can help take your company to the next level of success and improve your profit margin by decreasing production costs. This short read contains some best practices collected from several Original Equipment Manufacturers (OEMs).
Create a Wish List
Choosing a CM partner is like any other big decision, like buying a house or car, so the first step should be to create a check list. Take the time with your team to discuss frustrations you have had with your CM partners (past and present), identify what capabilities the new CM needs to have, and have a list of nice to haves on top of that.
Be sure to include input from your team at every level, from warehouse to final assembly. Identifying what each department’s needs are will streamline your internal processes and increase the value of the relationship.
Negotiate and Get it in Writing
When negotiating the contract, make sure to include your needs as discussed above. Most CMs will send you their boiler plate contract, and most OEMs will sign without careful review. Take the time to review the contract and ensure your needs are written into the contract. This extra step will help avoid confusion down the road and will provide better results from the CM.
Ask for a short list of existing customers and call them. Utilize their input to identify what issues/concerns they have with the CM. If they are not giving you much information, use your past bad experiences to use as examples. By discovering the issues customers have with the CM, you can avoid the same issues on your build or eliminate the CM altogether.
Do Your Due Diligence
Do not take shortcuts when selecting a CM partner; this could be the biggest business decision you have to make. Issues with your board can lead to malfunctions and recalls, so making sure you chose a quality CM can affect your bottom line down the road. Take your time making the decision and give yourself enough time before production needs to begin to vet out CMs. Reviewing content like informational articles, listed capabilities and facilities, services provided, customer testimonials, promotional videos, and any tools they offer will help you identify what kind of support you will get throughout the production process.
Despite the best of intentions, issues in production are unfortunately inevitable, so understanding how these will be handled in advance will help you to better understand if your choosing the right supply partner. How your CM handles problems can tell you a lot about their internal processes and, more importantly, their internal culture. Correcting the problem is not enough by itself. If handled properly, there should be a full internal investigation, a 5-Why review, and a written NCR (Non-Conformance Report) sent to you indicating the root cause of the error and what additional processes have been implemented to avoid it from happening again in the future. Ask the CM how problems are handled as the proper response here could go a long way in building confidence in your decision to work together.
Understand Their Capabilities
It’s important to understand that not all CMs may have the ability to meet all of your expectations. Production capabilities and services can vary widely from one CM partner to the next, so be sure to compare your needs against their capabilities.
Outline Your Expectations
Your expectations should always be the guiding force behind a successful relationship with your CM partner. By outlining and communicating your goals and needs to your CM partners, you can help ensure your expectations are always met and your product is built correctly.