Guide to Contract Manufacturing

How to find the best contract manufacturers for your business

By LaRita Heet

The top three ways contract manufacturing can help your business are through:

1. Providing the best value
2. Offering necessary expertise not available at your own business
3. Allowing you to focus on your business and your own core competencies

Action Steps
The best contacts and resources to help you get it done

Determine your needs

CM is not one-size-fits-all. You must decide which services/products you need before you look for the needle in the Haystack of CMs.

I recommend: To search CMs by state, go to ThomasNet and choose your location. This site is an excellent reference for all things CM, so look around while you're there.

Find your industry-specific CM

Contract manufacturers run a wide gamut, and include electronic, plastics, military, offshore, cosmetics, medical, aerospace, and many more. Search providers by industry to find the right CMs from which to choose.

I recommend: Go to ThomasNet: Contract Manufacturing to search by industry. Access Business Group, with 1.725 million square feet of distribution space and 14.7 million packages processed annually, offers product development, manufacturing, printing, and more for many industries.

Save money on products and labor

Contract manufacturing offers your business a way to satisfy your customers and make money, while using less of your own labor – or requiring you to hire experts in certain sectors. CMs have such experts on staff, saving you another salaried employee.

I recommend: Check out Siemens and their PROFINET solutions, which enable manufacturers to use a single network plant-wide.

Request for the quotes

When it's time to ask for a quote, you will submit an RFQ (request for quote). When you receive the quote(s), look at more than the dollar amount – check out what is and is not included in that price, so you can make the best comparisons based on total value.

I recommend: Since 1992, First Index has matched buyers and suppliers for custom-manufactured parts. Their Open RFQ Chart allows you to see all open RFQs daily. For offshore outsourcing, check out Source-Pro.

Watchful partnering

Using a CM doesn't mean never thinking about your manufacturing again. Keep an eye on your CM's product and make sure they're staying true to their contract – don't blindly assume they're keeping their end of the deal.

I recommend: BuyerZone's Contract Pitfalls To Avoid is a must-see before you sign anything. Check out Verticalnet's XE Suite, which offers XE Contract Manager to help you keep track of your contractual relationships. Verticalnet's Publications include a variety of e-sourcing information downloads.

Helpful advice for making the most of this Guide

• •  Do not: Depend on just one provider for your critical needs.
• •  Ask the CM: What is Plan B, if the original plan doesn't work out? If they don't have a Plan B, find a supplier that does.
• •  Seek out: Companies that are vertically integrated, so they can address more than just a single need for you.
• •  It's your choice: CMs can be used for a single product, or an entire product line.