What Is Contract Manufacturing?

Contract manufacturing is a form of outsourcing that allows companies to partner with an expert manufacturer to create all or part of a component or assembly at an agreed upon price for a set length of time. It allows companies to transfer portions of their work to a reliable sub-contractor, thereby reducing the need for the project to be completed in-house.

Here’s how contract manufacturing works and an overview of its benefits, which include cost-savings, streamlined operations and improved productivity.

How Does Contract Manufacturing Work?

A contract manufacturer will create a quote or estimate based on the labor, materials, and tooling costs necessary for your project. In addition to considering the amount of time and labor, a contract manufacturer will provide information for projected tolerances depending on the component material, overall size and fabrication processes.

To ensure they get the best price, companies will often request bids from multiple contract manufacturers. If you receive multiple quotes, make sure the estimates compare “apples-to-apples” services, and offer the same level of quality. Take into account the product quality, on-time delivery record, internal and external PPM, if they have a robust quality system in place, such as ISO 9001:2015 certification, and experience when you consider which contract manufacturer is right for your needs.

Benefits of Contract Manufacturing

Contract manufacturing offers a broad range of advantages over in-house manufacturing, or choosing manufacturers separately for every project. The primary benefits of contract manufacturing include:

Cost Savings

When using a contract manufacturer, the end user does not have to purchase the expensive equipment necessary to produce and assemble components in-house. A reliable contract manufacturer will have modern, well-maintained equipment and employ experts familiar with manufacturing operations. There is no need for setup and installation delays or employee training, which might otherwise be the case if you performed these steps in-house. Outsourcing manufacturing can help you save on energy expenditures, labor, repairs, maintenance, raw material bulk orders, and storage space.

Streamlined Operations

Contract manufacturing will let your company streamline operations by freeing up resources to focus on your core products and services. Instead of spending labor dollars on manufacturing every single component in-house, your company can outsource, which can help free up internal capacities, and increase productivity downstream. For example, if you specialize in weld assemblies, painting, and kitting, you can subcontract some or all of the raw components to a contract manufacturer. Doing so can free up your shop employees to focus on the assembly process. Not only does this reduce labor costs, but it also helps to keep employees safe and gives them opportunities to optimize their strengths.

Improved Product Quality

Good contract manufacturers are experts in their field. They have the equipment and knowledge necessary to produce high-quality components to strict tolerances. Instead of spending time and money hiring or training employees for in-house manufacturing, you can partner with industry experts to produce better products. 

Reduced Overall Build Time

A contract manufacturer is singularly focused on producing high-quality products that arrive on time and ready for immediate assembly, thereby reducing your overall production time. If you had to produce those components in-house, you may be waiting for the material lead-time, the lead-time to fabricate, and then the lead-time for assembly. By simplifying their internal processes and accelerating production, businesses can enjoy greater market accessibility and shorter turnaround.

Contract Manufacturing Applications

Contract manufacturing is available for a broad range of fabrication techniques and services. It can be used to produce anything from small automotive parts to large welded frames for a variety of industries and applications. At G.E. Mathis Company, we pride ourselves on providing an extensive range of manufacturing services. Some of our contract-manufactured products are used in:

Lifting Equipment
Truck Cranes
Wear Parts for the construction industry
Boom Components
Frame Rails

 

Our contract manufacturing can also be used to create a wide variety of component shapes and designs, including:

Channels
Angles
Bump-formed sections
Obrounds
Segments
Cylinders
Cones
Custom size seam-welded rectangular tubes

Why Use G.E. Mathis Company as Your Contract Manufacturer?

At G.E. Mathis Company, we are dedicated to providing the highest-quality contract manufacturing services in the industry. We understand the need to produce products quickly, which is why most of our parts are quoted within 24 hours, and we have lead times as short as 1-2 weeks, depending on the project. Our state-of-the-art 135,000 square foot facilities are capable of handling both small and large production volumes, from one-piece prototypes to full-scale multi-year production runs. We have a dedicated team of experienced craftsmen who provide our customers with superior components, and maintain ISO 9001 certification.

 

We continue to invest in the future of our company with the latest fabrication technology, so our customers know they are receiving the best manufacturing services in the industry. To learn how our contract manufacturing services can benefit your project, contact us today or request a quote.

 

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