Contract Manufacturers – Managing Relationships to Ensure Success
Barnes Christy (2006 Sept) Choosing the right contract manufacturer. In-pharma technologist newsletter. Online. Retrieved 15 Feb 2008 from http://www.in-pharmatechnologist.com/news/ng.asp?id=70481-datamonitor-contract-offshoring-manufacturing
In-Pharma Technologist.com is published by Decision News Media, a business-to-business publisher that supplies strategically relevant news directly to the desktops of decision-makers in the science, cosmetics and food industries. Journalist Christy Barnes reports on the Datamonitors’ a leading provider of online data, analytic and forecasting platforms for key vertical sectors. Christy Barnes reports. The article deals with a way to select good contract manufacturers for drug companies. According to the report, it is essential to develop a criterion in choosing a contract manufacturer. Good manufacturing practice (GMP)-compliant facilities and technical capabilities. Careful enquiry of possible vendors includes assessment of manufacturing quality and capacity as well as reliability, reputation and experiences.
After the selection process, proposals can be asked for and successful bidder will be chosen on other factors that will fulfill the company’s needs with regards to time, trust, cost and financial capability plus communication and cultural fit. Trend has been going to the India and China because of the low-cost of materials and labor. But the article argues that location should be a key factor in selecting partners for manufacturing. It is important to consider logistics when hiring a manufacturer since distance can become an issue in the long run if such is not considered at the onset of the project. Datamonitor is an independent company and as such it is believed that this report is credible.
This writer realized that a good contract manufacturer is vital, to any company, especially drug companies, engaged in outsourcing. The main thrust of this article should have been focused on offshoring as it was evident that it is actually what they were getting at. As it is, little emphasis has been given to the location of a chosen offshore vendor and it is not clear to this writer if the report actually got it point across.
Berbee Information Network Corp (n.d) An Insider’s Guide to IT Outsourcing. Online. Retrieved on 17 Feb 2008 from http://www.berbee.com/public/learning/Outsourcing.aspx
This article provides a general idea about IT outsourcing strategies and options. In reality there are a lot of potential benefits from outsourcing. The benefits are entirely dependent upon the approach, service performance and agreements that you can procure. Benefits include lower cost, focused approach, speed of implementation, quality service and access to dedicated materials. These benefits will eventually shape the decisions in seeking the help of a contract manufacturer.
Like any other business, high quality service from the contract manufacturer usually keeps the contract intact but what the company should do is to allot time for inspection of contract manufacturer facilities and management in order to keep with probable changes that might occur and prepare for this. Failures and mistakes could be avoided if regular communication within parties, and a more physical approach rather than telephone conversation will be adapted. This will give the parties a chance to establish a successful relationship.
Drakulich, A (2007) Strategies for working with contract manufacturers. EPT- the electronic newsletter of Pharmaceutical Technology. Online. Retrieved 17 Feb 2008 from http://pharmtech.findpharma.com/pharmtech/article/articleDetail.jsp?id=446665
Almost 95% of Pharmaceutical companies bring their operations to outsourcing companies in 2007. The primary rationale behind this being the reduction of cost associated with procuring new machinery, developing new facilities and staff engagement. Another reason is the number of products in the company’s channel.
When integrating outsourcing with the company’s operations it is important to realize that full control over all operation is compromised and that reliance to the contract manufacturer’s experiences and capabilities is given up, but it is also essential that key company personnel be on hand to oversee contract manufacturers’ operations. Constant communication, regular visits (announced and unannounced) and quality control should be part and parcel of a successful company – contract manufacturer relationship. It is also important to realize several key factors that make the project a success.
· Knowing that things won’t go smoothly all the times, minimizes frustrations and finger pointing.
· Open and regular communication between parties instills understanding on both sides
· A level of confidence should be established on both sides, so that fewer questionable work decisions will be addressed.
· Due diligence is an important factor in ensuring smooth working relationships
· Ensuring that understanding of each other’s responsibilities, possible problems and any other issues relating to the project is addressed before, during and even after the project.
It is also essential to have backup plans and contingency measures should anything go wrong during the implementation of the project. To avoid finger pointing and placing blame it is important to make sure that all avenues are covered when dealing with contract manufacturers.
Fling, Mark. (2007). Small Business Selecting a Good Manufacturer. EzineArticles. Retrieved February 18, 2008, from http://ezinearticles.com/?Small-Business-Selecting-a-Good-Manufacturer&id=709964
The article deals with guidelines in selecting the right manufacturer. It also discusses critical factors in order to avoid costly mistakes like production poor quality products that even needs to be pulled out of the market. This also hampers the company’s credibility with its intended clientele. Although it is widely accepted that the primary reason for choosing to outsource manufacturing operations is the cost consideration, it should be realized that quality should not be sacrificed in order to cut down on manufacturing costs. Doing so might prove to be more costly in the long run, the article cited the example of what happened to big companies that had outsourced production to china only to have to recall products not only because of poor quality but also due to the fact that products that were produced may even be harmful to end users. This article provides sensible advice to businesses in conducting their search for contract manufacturers.
Due diligence is advised together with careful planning. Fling’s checklist for success are as follows:
1. Research is imperative – if factory visit is warranted do it. Face to face communication is essential in the long run.
2. Check your contract manufacturer of choice references. Making sure that you research pertinent information regarding your contract manufacturer’s way of conducting business.
3. Quality control measures should be set by both you and the contract manufacturer. And making sure that it is adhered to will prove to be an essential move to make sure that your contract manufacturer continues to provide your company with quality products.
4. Making sure the your vendor realizes that any change they may want to introduce with regards to manufacturing protocols, suppliers of raw materials, distribution channels and quality control checks should be routed to your company and approved by such before any implementation of their proposed changes be done.
5. Quality control and cross checking should be done frequently and randomly by a trusted quality control office
6. Be aware of all possible scenarios, especially with regards to shipping. This is more important if your vendor is overseas and locational difference may prove to be a burden that needs to be addressed. Documentation and legal processes of the places/countries where the products will be shipped should also be noted in order to facilitate faster delivery of products.
7. It is also important to have contingency measure should your primary supplier run into any problems. A backup supplier/manufacturer should be available rendering the same qualities of your primary supplier.
Your company should also consider who the other clients of your chosen contract manufacturer are. You might get into snags with that contract manufacturer if they have too many clients or their clients are big and would require their full attention. It might also be a cause for concern if you are the first clients of the contract manufacturer. Mark Fling is a former design and development engineer turned marketing consultant primarily on the internet, he currently advises small business with tight budgets to make use of their little resource to maximize their potentials. Mark Fling is also a resident expert author of ezine articles.
Hogan, J. (2005) Strategic outsourcing: the importance of choosing the right partner. Computerworld outsourcing articles. Online. Retrieved 17 Feb 2008 from http://www.computerworld.com/managementtopics/outsourcing/story/0,10801,99836,00.html
Joe Hogan, vice president of worldwide marketing HP managed services within HP services compared choosing an outsourcing partner to choosing a life partner, he said that like marriage, partnering for outsourcing requires trust, collaboration, communication and chemistry. Ability to resolve conflicts, adaptability to certain changes and a goal oriented approach is key to choosing an outsourcing partner. It is important for any organization to consider contractors characteristics to establish whether or not they will be a good partner in business. Studying potential contractors background is vital in establishing reliability and confidence in those contractors. Previous clients feedback on how the contractor conducts business and even employee feedback on how they are treated by the contractor, if possible. Contractors with corroborative and innovative insights and adaptability to change in any structure. It is also important to keep track of the contractors’ ability to fit to your set standards. Once a contractor is chosen, it is vital to invest some effort in maintaining the relationship. Taking part in the contractors operations, sharing insights and suggestions to improve performance, communicating problems and changes that you may want to accomplish. Providing both positive and negative feedback in order to improve the service. Sharing experiences for the betterment of the operation and accepting contractors insights and ideas that may also be a useful tool in the operation of your own company.
Hogan seems to be a credible writer, part of a contracting firm himself, his information seems to hold ground in choosing the right partner for outsourcing. He was able to share key points and advise that can enable a firm that is looking for a contracting partner to find a good one that will end up in a long relationship.
Kresti, M (2007) Guide to Outsourcing: All signs point to Outsourcing. MDDI, March 2007. Online. Retrieved 18 Feb 2008 from http://www.devicelink.com/mddi/archive/07/03/030.html
This article tackles the medical device industry as another utilizer of outsourcing. Determining the factors that influence the use of contract manufacturer. Globalization and global trending is taking place all over. Businesses are getting more and more competitive. Technology gives rise for improvement in all aspects and the medical device industry is not exempted. Calls for quality, compliance, marketing and cost seems to be the culprit behind necessitating the need for contract manufacturers of companies that seek to compete in the growing industry that constantly calls for a continuous supply of products to meet the demands of the challenging market. As with other industries, the medical device industry continuously grows and so does the dynamic market in which it exists implicating that high quality products be produced at faster rates lest the company be left out. It is imperative for the medical device companies to look for contract manufacturers that will provide them with quality products that are made and delivered to clients at speedier rates than they are used to. Through these implications, companies not just in the medical device industry could determine whether it is the right time to seek the aid of a contract manufacturer or continue to perform its activities without them. In doing so, problems could easily be avoided or minimized.
Kriplani, M. (2006) Brady R, ed. HSBC’s lessons in outsourcing. Special Report – Outsourcing, Businessweek Online. The McGraw-Hill Companies. online. Retrieved 18 Feb 2008 from http://www.businessweek.com/magazine/content/06_05/b3969426.htm
HSBC is one of the largest non-US based corporations to join the outsourcing trends. Its software development center in Pune, India has become one of its central and most important operation facilities. For HSBC outsourcing has proven to be a great strategic move that enabled them to move forward. Key lessons learned was learning to start small then building up. Getting the customer involved was also vital; cooperation with their own experts enabled them to finish a job that shouldn’t have been that easy for neophytes. Using a hybrid model was also key in HSBC’s success at Pune, partnering with other companies was not disregarded by the company if it means the success of a particular project, HSBC also learned that building a sense of community for their outsourced workers spelled success specially in the field where most of the staff just came out of college and still rearing to prove themselves, a sense of community and goal setting of quality work in the staff provided them temperance and lastly maintaining quality keeps the business a success. Rumi Contractor HSBC’s chief information officer said that it is also vital to keep messes within the company, that it’s not the outsiders’ job to fix their mess. And his advice is to avoid short term outsourcing. It’s better to let company employees do the shorter jobs and let the outsourced employees undertake the bigger ones.
HSBC proved that outsourcing can be successful if done correctly and with the right partner. Letting ‘outsiders’ do some of the work for them enabled them to concentrate on the main thrust of their company which is banking. In outsourcing it is vital that the company be involved at the onset of operations. It is also vital that contractors are familiar with the company’s operations, minimizing mistakes. Cooperating with the contractor also is an important aspect in keeping relationships, sending key personnel to assist in some aspects of a particular project is a helpful tool.
Leveen, T (2002) Private Labels. Natural Products Marketplace article. Online. Retrieved 19 Feb 2008 from http://www.naturalproductsmarketplace.com/articles/271feat1.html
Brand new retailers should do a comparison check before hiring or procuring a contract with a manufacturer. Considerations would include manufacturer facilities and the contractor aside from owning its own facilities should also have extensive experience private labeling. Quality should take precedence above all, materials and finished product should be tested for quality and the process should be double checked for quality assurance. Response time should also be considered when choosing a contract manufacturer. It is recommended that interview with potential contract manufacturers should be conducted on a one on one and face to face basis and asking intelligent question to determine viability of creating a partnership with the contract manufacturer on hand. Either personally design or have the label done professionally is upto the retailer but the manufacturer should be able to provide equipment for whichever way the retailer will go. It is also essential that the company chosen will be able to work with the retailer and achieve the end product that is suited to your taste. Skilled personnel equipped with the latest technology providing high quality products delivered on time under competitive rates should be the driving force behind every retailer’s choice.
Martinez, J (2007) Building business success through outsourcing. Ezine articles. Online. Retrieved 18 Feb 2008 from http://ezinearticles.com/?Building-Business-Success-Through-Outsourcing&id=761957
Jason Martinez is an ezine articles expert author. His article states that outsourcing has been subject to controversies but continues to gain ground. Initial problems included vendor problems and poor communication channels. Old trends require OEMs to contract several manufacturers in order to produce a single product. But nowadays many contract manufacturers learned to set themselves apart from their competition by providing an all round solutions for OEMs.
Especially in the medical devices industry where constantly changes trend is the trend, it is hard for OEMs to find solutions for their manufacturing needs. A contract manufacturer who has a good level of understanding of their client’s and potential clients’ technologies and furthering their knowledge base regarding the industry is already a head above the rest. Outsourcing when done properly will lead the OEM and their contract manufacturer into a successful business partnership that can last for years reaping benefits for both parties. It is imperative though that careful selection of contract manufacturer be exercised in order to meet goals set by OEMs upon themselves. And choosing a multitasking contract manufacturer accomplished at innovative product schematics and possessing vital engineering proficiency coupled with project management abilities may mean the success of a medical device company.
Medical Design (2007) Help for Medical Inventors. Online. Retrieved 18 Feb 2008 from http://medicaldesign.com/contract-manufacturing/help_medical_inventors/
With the uphill battle faced by intellectual property (IP) holders, many turn to contract developers and manufacturers for assistance. Many of these inventors don’t have the means and the funding to facilitate development and production of their products. Richard Henson of Source Scientific LLC states that several OEM and IP holders makes use of his facilities to do experiments and inquire with his engineers regarding their concerns on their products/inventions. A great collaboration is what he calls it. Contract developers and manufacturers also assist new players in the field regarding compliance with federal regulations. While Vytas Pazemanas of Aubrey Group, Inc mentioned that they help new players by providing guidance on start ups and overcoming hurdles specially with regards to regulations. Intellectual Property holders collaborate with these contract developers and manufacturers in order to develop their ideas and provide the means and funding in order for the product to be manufactured and marketed.
Success of this collaboration is dependent upon the trust and respect given by both parties towards each other, they noted that working without this elements will pave way for failure of the project. Collaboration also means accepting valuable ideas and request for changes, integrating them into the project design in order for easier and progressive manufacturing to be achieved. It is also essential for IP holders to be patient since manufacturing and development of new products may take a while.
Morante, N (2007). Working with contract manufacturers. Specialchems4cosmetics – decorative cosmetics editorial. Online. Retrieved 19 Feb 2008 from
Nick Morante is a consultant and contract formulator for leading cosmetic manufacturers. In this line of business, working with contract manufacturers is sometimes necessary in order to produce quality products at the right quantities to service the market. As a consultant Nick is faced with the task of recommending contract manufacturing firms to clients who are in need of such services. It is vital for him to know how to choose the contract manufacturer that fits the needs of his clients and has a reliable and trustworthy reputation lest he lose his clients for recommending unreliable firms. The best advise Morante gave is the nondisclosure agreement he sees forth has to be set up and agreed upon by the client and the contract manufacturer in order to protect all the parties involved in cases of accidental or intentional disclosure of any confidential assignments. He also suggested that the client be present at the onset of the manufacturing and oversee its production until the time that he is satisfied with the way things are run inside the factory. Proper documentation is also key in order to keep track of all the events that took place before during and after production.
Natural Products Insider (2007) Industry experts address contract manufacturing issues. Natural Products Insider Articles. Online. Retrieved on 17 Feb 2008 From http://www.naturalproductsinsider.com/articles/industry-experts.html
This article interviews leading industry experts for contract manufacturing including, Thomas Tierney, CEO of Vita-Tech Int’l, Ron Udell, President of Soft Gel Technologies, Robin Koon, senior vice president of Best Formulations and Bob Olson, director of national accounts of Century Foods International, Lucy MacLoughlin, chief operating officer of Rhema Industries, Kenn Israel, Vice President of Marketing for Robinsons Pharma, Lucy Ackerman, director of sales, Indigo Labs, and Richard Kaufmann, executive vice president of Paragon labs, all are experts in the field of contract manufacturing, their firms leading contract manufacturers serving major industries. The group offers advice on the key factors to make Manufacturing contracts successful in achieving goals; they also offer advice on avoiding pitfalls to make sure primary goals are reached.
These experts agree that companies go to outsourcing and contract manufacturers to enable them to focus on certain aspects of their operations like Research and Development, marketing, rather than focusing their energies on production which can actually be passed on to contract manufacturers, who already have the equipment, facilities and know how to produce goods that the company requires. In order to achieve successful company and contract manufacturer relationship, the experts said that a clear understanding and formal agreement on product stipulation is essential. Communication should also be kept open. The main thrust should be that of the integrity and reputation of the contract manufacturer to be hired and the quality of work they possess. Products manufactured should adhere to your company’s standards. The contract manufacturer should be able to provide products that have the right quality and quantity delivered at the right time. It is an essential agreement factor if a successful partnership with the contract manufacturer be fulfilled. Contract manufacturers should also work closely with the company that hired them, assisting and collaborating with them to produce the best product possible. It was also mentioned that a good contract manufacturer stays updated with the current GMP practices and trends. Up to date facilities and machinery are also essential to provide the best products in the chosen industry. Certifications should also be kept current by contract manufacturers to assure the clients/customers that they adhere to set standards by government and governing agencies that handle their industry professions wherever they maybe. It was also noted that specially for pharmaceutical companies it is essential for contract manufacturers to have state of the art laboratories and trained specialists that will provide quality service to their clients, making sure that their products will be of high quality, using these facilities to make sure that raw materials are of essential quality and processing of these materials and eventual end product pass quantitative and qualitative tests.
Olson, B. (2005) Choosing a contract manufacturing partner. Prepared Foods. Feb 2005. Troy, MI. BNP Media
According to Bob Olson of Century foods, using contract manufacturers to handle production of goods allows the company to focus its efforts to its core competencies. Contract manufacturers (CM), if handled correctly does not only provide production arm but can be a full service partner aimed at reaching the same goals as the company, serving the same customers, investors and shareholders. In choosing a CM, it is important to consider the services you require, this will enable you to target CMs that offer your required service. It is also vital to know if the CM’s facilities, equipment, services, quality and certification meet the your requirements. It is also important to note the reputation of the CM. It is also essential to check demographics when choosing your CM.
Quality and quality control measures should be the outmost priority of the company, hiring strictly on cost but compromising quality is a big no-no. Collaborative efforts with the CM should be handled accordingly by executives from both sides and regular meetings should be conducted in order to assess work relationships and work on any problems that may come up. The best way to choose a contract manufacturer is to make sure of the CMs reputation, functionality, reliability and compatibility with your company.
Olson, B (2005) How to get the most out of your contract manufacturer. Functional Ingredients Magazine. Online. Retrieved on 18 Feb 2008 from
Bob Olson works in the food industry and his suggestions are targeted mainly for food production industry players. To save time, money and potentially improve quality of products manufactured, many companies have to chosen to outsource manufacturing of goods to contract manufacturers, it should be realized that the main core of contract manufacturers is that – manufacturing or production. With the right contract manufacturer, the company can lower its expenditures by minimizing investments by negating expenses from equipment, factories and personnel by contracting with outside manufacturers. Several criterion needs to be address in order to find the right contract manufacturer. It is important to assess the service you will be requiring and question potential CMs regarding their facilities if it will coincide with what you have in mind. It is also essential to check for quality control measures that the CM implements in their plants, certification from the government and governing agencies should also be checked to see if the CM are following government guidelines in manufacturing food products. Most CM also offers some R & D services, if possible this can be availed to reduce developing time of new products and visitation of facilities in order to assess their compatibility with your company’s needs is essential.
Demographics and geographical location of the CM plants/factories should also be considered since ingredients needs and government restrictions can provide additional problems/hassles in case your ingredients are not readily available in the area. It is also essential to realize that the lowest bidder should be hired, this might compromise quality, a worthy advice is to not sacrifice cost for quality, the right blend should be located in order to maximize growth. A final consideration is the packaging option. How many packaging option does the CM facilitate. Future products may require smaller or bigger packaging and the CMs ability to adapt to this may become an important factor in delivery of goods.
Pudles, S. (2005) How to begin the process of selecting an Ems provider. The IPC EMS Management Council. Online. Retrieved on 18 Feb 2008 from http://www.ipc.org/3.0_Industry/3.5_Councils_Associations/3.5.0_IPC/Final_OEM_Guide_4-05.pdf
Most of the OEMs would rather directly process the production rather than construct a strategy for the production itself. The idea of earning quickly have cast aside necessary steps in building a strong relationship between the contact manufacturer and the company. This can result into failures and accidents in the near future. This article defined strategic approach as a critical factor in implementing business processes. Using the designs of James Quinn and Frederick Hilmer in identifying what they believe to be efficient core competencies; skill and knowledge, flexibility, limitation in number, uniqueness, areas of company domination, elements that are important to the client in the long run and that should be embedded in the organization core strategies.
The article also examines the company’s will to identify the potential benefits that could be fulfilled by the contract manufacturer that can prove to be more effective than core competencies since the first thing most companies will look for are benefits that can be derived from the CM. Another factor to consider is that the cost or low cost to be exact of a CMs bid shouldn’t be the first in the agenda of a company, it is important to choose a service provider model that will meet the demands of the company and adhere to their set standards.
Sicard (2005) Rosenthal, BE Ed. Five Things Manufacturers Should Consider When Selecting a Contract Manufacturer. Outsourcing center. Online. Retrieved 18 Feb 2008 from http://www.outsourcing-manufacturing.com/5things.html
According to Sicard, vice president of professional services for Webplan Corp, there are 5 things that an OEM should take into consideration should the company wish to go into outsourcing. The first is that sacrificing visibility and control means sacrificing a key mechanism in the company’s existence. The CM should be able to provide upto the minute report of the status of your products. The second factor to be considered has to do with inventory. The CM chosen should be able to give you timely updates on inventory levels on all aspects of production, it is important since having a CM does not relieve your financial responsibility and liabilities. Another key factor is the ability of the CM to respond in a timely manner to changes in the schema of production and general strata of the industry you are in Inability to do this will mean a delay in production, resulting to delay in delivery and eventual dissatisfaction of your clients. It is also essential that your CM is able to innovate and respond to ideas crop up out the seams of the industry, especially in electronics. CMs who are unable to do this compromises the company’s initiative of introducing new products and the lost opportunity can be fatal. Geographic location may also prove to be an important factor in choosing your CM, it can either be close to you or close to your target market. Closer location can mean faster delivery of goods to intended clients.
The best test for this is to simply interview your CM potentials and let them sell to you their company’s capabilities. A prompt response would mean you’re in good hands and a questionable reply can mean you have to look for another contract manufacturer.
Schwartz, A. (2006) What you need to know about contract manufacturing. Medical Product Outsourcing. July/August. New Jersey. Rodman Publishing.
Aimed at the medical device industry Alan Schwartz, an FDA veteran points out that the industry is ever changing, that new products better than the previous ones are coming out in strides. The industry is dependent upon entrepreneurs who’s base is on concept and design. Manufacturing of these new products may require state of the art equipment and facilities that may prove too much especially for a newly established business. Contract manufacturing has become a major element in production of conceptualized ideas, resources can then be focused on research and development. A major factor in establishing a good relationship with a contract manufacturer involved in medical devices is the determination of the role of each party in FDA compliance.
Choosing a contract manufacturer in this field, the contractee should make sure that the contractor is FDA registered, its compliance with QSR/cGMPs should be well documented and it is important that the contractor has an enforced insurance policy. It is also important that software used by the contractor is validated. The contractee must also be aware that they are allowed to observe the manufacturing process. It is said that ensuring that the contract manufacturer you choose is FDA compliant will lead to fewer problems encountered for both parties.
Schweber, B (2003) Making it under contract. Electronics Design Strategy News. April 2003. Online retrieved 18 Feb 2008 from
Contract manufacturers have been entrusted with the job of procurement. It seems to make sense since they are connected in through the seamless movement of manufacturing. The author like the previous ones emphasized basic steps that must be taken in order to ensure that contract manufacturers that will be hired will provide the best service possible for the company. According to the author aside from ensuring quality preservation in contracting manufacturers, it is also essential that the approved vendor and the company personnel be comfortable with each other. Interaction and communication is essential in keeping the CM relationship and rapport is essential in keeping this communications personable. Meetings should also be conducted in order to assess any problems, legalities, and any other tools that maybe needed by either party in order to facilitate the exchange successfully. Equipment that could support the design, and support for future expansion of the design.
Contract manufacturers often share the burdens of work load more than the company. Dealing with raw materials, process and time schedule of production, even product development.. Through working as a designer for new products and coming up with various innovations, can increase your skills in various applications areas and industry contacts.
Weber, A (2002). Contract manufacturing on the rise. Contract manufacturing consultants online – assembly articles. Business news publishing company. Online. Retrieved 17 Feb 2008 from http://www.cmcseattle.com/newsfolder/assembly-02.htm
With the lifecycles of electronic products shortening by the minute, marketing and disposing of these products is critical to its producers. Contract manufacturers allow OEMs to leverage the supply chain and prolong the lifespan of these electronic products. As globalization and global expansion is becoming the trend, the industry has adapted to the growing trend. Contract manufacturers once were one service shops has evolved and became a one stop shop catering to all levels in the production chain. The use of contract manufacturers have several advantages most specifically cost reduction, one of the primary reasons for companies choosing to outsource their production operations. Contract manufacturers also gives rise to better efficiency, flexibility, quality oriented, a faster delivery time enabling OEMs to market their product at faster rates while offering quality of products. But despite all these, there are also disadvantages in dealing with contract manufacturers. The most essential one is the lose of control on the production side, since production is given to contract manufacturers. Goal setting must be instilled with the contract manufacturer and continuous monitoring of processes should be an SOP for OEMs to ensure that production of goods meets their set standards. In choosing a contract manufacturer it is essential that the firm is ready with manpower and tools in order to manage the contract manufacturer. Incentives to produce behavior and expected work must be realized in order to reach goals. Contract manufacturers should also be able to adapt themselves to changes and improvements that may be implemented during the course of the contract. But it can be noticed that top tier contract manufacturers are at par with the OEMs regarding technological knowhow and experiences gained. Compatibility of both parties should also be a main consideration with regards to choosing the contract manufacturer since it may be realized that the relationship to be developed by both parties can last for a long time.
Zetter, M (2008) Manufacturing problems and alerts. Venture Outsource articles. Online. Retrieved 18 Feb 2008 from http://www.ventureoutsource.com/contract-manufacturing/benchmarks-best-practices/pcb-assembly-operations/manufacturing-problems-and-alerts
Choosing a contract manufacturer is easy but making sure that quality of products manufactured is hard and developing and keeping relationships with the contract manufacturer harder. One of the best ways to keep contract manufacturers on their toes and making sure that quality work is being done, constant communication is essential. It is recommended that a standard communication tool be developed in order for the flow of operation to be kept smooth. A manufacturing alert provided for key persons both in the company and contract manufacturing firm should be an essential tool in keeping each other up to date with the progress of any venture.
Format of the marketing alert tool is recommended as follows:
1. Summary – summarize problems/issues or data that needs to be delivered to the key personnels.
2. Calendar Days – tracking device to alert everyone regarding the number of days that passed since inception of the problem and deadlines for solutions.
3. Manufacturing areas impacted – areas of manufacturing that was affected by the issue on hand.
4. Manufacturing alert team – the team will consist of the key personnel that needs to be informed of the current situation/issue/problems that the manufacturing process encounters.
5. Manufacturing status – clearly stating the current status of all the manufacturing departments, areas that have stopped production, areas that require prompt attention and areas that have finished with production
6. Installed base impact – where the total numbers are provided. Including products shipped, number of products shipped to certain companies/persons/clients
7. Fulfillment Impact – this contains backlogs and any problems encountered at the distribution channel level and deadlines to be reached and that have lapsed.
8. Next Steps – this will include key personnel, and their role in the solution to the problem. Recommendations can be included here.
9. Issuing source of manufacturing alert – this should include the name of the particular individual tasked in handling this report.
In handling contract manufacturers it is essential to keep track of all the developments and problems that arises during manufacturing, keeping up to date means that problems are solved at the earliest possible opportunities and solutions are implemented at the lower levels before reaching the peak and producing more problems.
Contract Manufacturer – Managing Relationships to Ensure Success
ü Aim of the Research
ü Scope Of The Study
ü Information Sources
v Contract Manufacturing
ü History (Highlights and Turning Points)
ü Need For Outsourcing
v Need For Contract Manufacturing
Ø Capacity And Capital
Contract Manufacturing Process
ü Pros And Cons Of Outsourcing
v Advantages Of Outsourcing
v Disadvantages Of Outsourcing
ü Capabilities And Qualities Of A Good Contracting Firms
ü The Risks of Outsourcing
v Identifying Risks in Outsourcing
v Keys To Reducing Risks
v Keys To Contract Organizations Meeting Challenges In Quality And Regulatory Requirements
v Selection Of An Outsourcing Provider
Ø Characteristics of a good contract manufacturing firm
v Contract Manufacturing Organization Requirements
Ø Contract Agreement / Term Sheet
Ø Manufacturing Quality Agreement Between The Parties
Ø Potentials Problems/Risks Analysis
Ø Keys To A Good Relationship
§ Clear Contract Manufacturing Agreement
§ Client Involvement
§ Management’s Involvement
§ Scheduled Team Meetings
§ The Project Manager
ü Regulatory Compliance Requirements
v Agreement Between Contractor And Client To Meet Regulation
v Regulatory Issues In Contract Manufacturing
Market and Industry
ü Market Shares Of Industry Leaders
ü Types Of Contract Manufacturing And Research Firms
ü Supply And Demand
v Strategic Tools
v Time To Market
v Identification Of Outsourcing Partners
v Financial Considerations
v Preferred Providers
v Suitable Alternatives
Ø Current Environment
v Contract Manufacturing Market
v Open Options
v Globalization Trends