PEKO Precision Products

3 Things you'll surely see in a High End Contract Manufacturing Plant

Posted by Scott Baxter on Mar 16, 2015 10:01:06 AM

ContractmanufacturingequipmentsortingNot all Contract Manufacturers are the same:

There are many different kinds of CMs for many different kinds of customers.  Some OEMs can manufacture their product using the cheapest CNC Machining and Assembly shop.  Others require a more sophisticated shop to produce their products according to very specific Quality and Regulatory standards.  Industries like Defense, Medical, Semiconductor and Energy all have unique requirements that determine how the entire manufacturing and Quality process must be handled.  A great CM will have robust systems in place to manage all of these unique requirements as the customers' product flows through the shop. by taking a tour of a facility like these, you'll see some stark differences between a high end contact manufacturer and its lesser counterparts.    

Contract Manufacturing in the US is still solid as long as the right products are available to build.  It is unlikely that million piece orders will be coming back here from Asia but still there is a market for low volume assemblies and products to be built.  If you decide to outsource your low volume, high complexity products and assemblies, here are some things you'll see in a High End CM in that category:

1. Manufacturing and engineering production teams

When touring a High End Contract Manufacturing plant, the teams that support the manufacturing efforts should be evident.  You'll notice a range of competent employees "magically" turning the product from raw materials into finished goods.  There should be folks on the floor who are making parts, inspection personnel in the QA department, engineering teams for routing and optimizing the processes, assembly workers and supervisors ensuring that the product is assembled correctly.  Furthermore, you'll see manufacturing managers, industrial process engineers, test personnel, purchasing and production supervisors acting as the glue to manage and monitor Quality, Delivery and Cost.  Great CMs will have a strong employee infrastructure consisting of a smart mix of direct and indirect employees who can take on the difficult task of managing complex products through the manufacturing process.

2. Continuous improvement efforts

A great CM understands the value of continuous improvement efforts.  Just like an OEM, the Contract Manufacturer will take steps to improve the efficiency and operational effectiveness of the facility.  This is paramount to the success of the business and the customers.  By incorporating lean practices, six sigma, TOC and other methods, the cost savings can increase both profitability and marketability for new customers.  These improvements positively effect the throughput and quality of the CM.  The management team should actively pursue these efforts and help the other employees to understand the benefits of implementing continuous improvement efforts.  As a manufacturing extension of the OEM, the it is the CM's responsibility to its customers to ensure their product is being produced as efficiently as possible.


3. Extensive in-house capabilities

A common theme I have seen in great Contract Manufacturing is having a vertically integrated business model.  This is a huge difference between a true Contract Manufacturer and a Contract Assembler that does complete builds.  I am of the opinion that the CM should be able to manufacture approximately 50 percent of the value add within the final product.  This gives the company a high level of Quality control of the product.  For instance, if the OEMs product is a piece of high tech machinery or equipment, the CM should be able to produced the CNC Machine parts, milling, turning, sheet metal, welded frames, electrical wiring, clean room, assembly and testing.  Every part is critical and avoiding outside vendors is a great way to avoid Quality and Delivery issues.  Relying on outside vendors can cost a CM their reputation and easily blow important delivery schedules.  When touring a CM, ask about which manufacturing services are provided in-house versus outsourced. 

CM Wrap up:

When choosing a CM, most OEMs will take tours of a few good candidates.  The list above provides a small insight on what types of things to look out for when touring these facilities.  By understanding these variables and why they are important, OEMs can compare and contrast to make the right decision.  They can also see why not all Contract Manufacturing companies are not the same and what it will mean to their product at the end of the day.  For more information on outsourcing your product manufacturing or to schedule a tour, contact me at or simply click below and fill out a form.

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Topics: Contract Manufacturing