More companies are considering a contract manufacturer for all, or part of their product lines. What criteria should world class companies utilize when searching for the optimal US based manufacturing partner?
1) Should I make or buy?
Manufacturing a product requires major investments in; facilities, equipment, inventory, labor, etc. Contract manufacturers have economies of scale, state of the art equipment and resources that can be focused and used as needed. The efficiencies and purchasing volume usually more than make up the profit added, which means that you still save money even though there is another layer in the process. Any products made in China must use a “Landed cost equivalent” comparison to Made in America that include transit, international management, and quality costs.
2) Is there a track record for the manufacturer?
Can your potential partner demonstrate successful relationships as a partner on a project with similar product requirements? Ask for examples, references, and production capacity results. Was the product for US consumption only or did the partner handle international logistics as well? Was it a new venture or was the product previously manufactured overseas and relocated or “On-shored” to this potential partner. There are numerous factors that can be reviewed with a potential manufacturing partner to ensure they have previously successfully handled a project that is similar in scope to your requirements.
3) What is the breadth of their experience?
Management experience is critical. It is important that the manufacturing partner has the facility, equipment, and processes in place but it is even more important that there is experience and depth on the management team. Does the team have the technical and product experience to be successful with your product? Do they have experience in international procurement and the management of a deep, complex BOM if this is required? Do they understand the management of work instructions, cost management, and visible shop floor quality metrics? Are long term supply chain relationships in place? What about logistics and service relationships? Evaluating the capability of the management team is critical and should involve a shop tour to visibly confirm a strong management presence.
4) What are their capabilities?
In order to be successful as a manufacturing partner for turnkey products, there must be an in-house design and engineering capability. If the product is new, having an internal expert that is familiar with the manufacturing capabilities of the facility can be critical in the upfront management of “Manufacturability for cost and efficiency” factors. This can have a huge impact on product cost and time to market issues if it is addressed up -front. If the product exists and is being relocated to a new partner there are numerous transition steps that must be addressed. Are the designs, drawings, and assembly instructions clearly documented and are they consistent with the potential partner’s capabilities? Is there an engineering point person that will lead the technical relationship for a successful transition?
5) Is the manufacturer an assembly house?
The optimal US based manufacturing partner can offer a Total Solution to a customer’s product demands. This includes complete diversified in-house manufacturing capabilities so that the customer is engaging a “One Stop” partner solution. In addition to an experienced management team, the right partner must have in place excellent proven management procedures that track the product seamlessly throughout the manufacturing process. Dedicated program management should be available where required. Automated material loading equipment as well as robotic equipment ensures that management has invested in their facility capabilities to compete on the world stage. Lean manufacturing principles and cellular manufacturing techniques should be evident on your plant tour. Designated cells should offer efficient electro-mechanical assembly capabilities for both sub-assemblies and total turn-key final assembly and test.
6) Is there an approved quality system?
The international standard for approved quality management systems is governed by the ISO standards. Your manufacturing partner should have an ISO 9001:2008 approved quality management system. This ensures that an independent auditor has reviewed the company’s processes, standards, organization and quality assurance methods. It covers numerous activities including the handling of part rejections (both internal and external), on –time delivery statistics, customer feedback surveys and strategic initiatives to continuously improve the organization. The auditors are on site annually to ensure that compliance is a continuous process. Another factor to ask is whether the facility has been approved by one of the product safely agencies such as UL, EL or CSA to manufacture products for companies that require these safety ratings. This is additional evidence that your partner has a focused quality management system in place.
7) Can they handle changes and lumpy demand?
Many products require powder coating, silk screening or graphics applied for branding purposes. Does the manufacturing partner control these processes in-house? This is the most efficient way to provide a total turn-key service solution to the customer. It provides a process for improved quality control as well as a shorter lead time service.
8) Do they have Warehousing and Logistics?
Delivery schedules are usually critical to maintain but can sometimes be subject to revisions with little or no lead time. Does the partner have in-house capability to manage fluctuations with buffer stock or a warehousing option? Is there a logistics department that can manage and track world-wide delivery services for the customer?
9) Is there adequate support?
Another critical service that your manufacturing partner should excel at is both customer and technical services. This should be in place from the sales and order entry process right through to the field installation and technical service function. During the manufacturing process, dedicated program management and a full management ERP system should be in place to provide program status updates when required. Product serial number tracking is often required for product warranty purposes and the management system should ensure that this feature is available
