Choosing a Contract Manufacturing Partner
Tips for selecting a contract manufacturing partner
Outsourcing some of a company’s processes has long been in the arsenal of forward-looking organizations. Initially, it was primarily used as a short-term option to reduce costs or deal with a new product or a large order. As time passed, it has grown to become a fundamental part of many companies business strategies. Today, the trend is to find a contract manufacturing partner to provide expertise and services in areas that are considered critical to the organization’s success. What should be considered when choosing a custom or contract manufacturing partner of this type?
Building a better business with a contract manufacturing partner
Manufacturing industries are studied and informed by a large group of “industry observers.” Each element of a company is examined, trends are recorded and anticipated, and companies analyze reports that provide information to devise and implement improvement strategies. The consideration of a contract manufacturing partner is a factor that is constantly explored. In fact, general spending on subcontracted manufacturing services in the global market has grown in the last two decades, from US$45.6 billion in 2000 to US$86.6 billion in 2018.
Initially seen primarily as a cost-cutting or capacity management strategy, recent thinking suggests that subcontract manufacturing has matured so that relationships are now more standardized and have become driven by processes and people rather than by price.
In this context, it is easy to predict that more high-level and critical manufacturing functions will be contracted out over the next decade while subcontracting of low-level services is likely to stabilize.
Of course, the subcontract manufacturing decision assigns time-consuming tasks to a trusted third party, which would otherwise be performed using internal resources. It may be the case that, when manufacturing internally, the companies may not always be equipped with the latest and most innovative tools, equipment, and processes. As a result, the company’s efficiency and productivity can be significantly affected, resulting in increased costs.
It is important to note that working with a subcontract manufacturing partner allows companies to gain external knowledge, skills, and tools that may not be otherwise accessible. It is the role of contract manufacturing companies to stay informed with the latest developments in their industries and employ the most effective equipment and tools. Partner companies can take advantage of the benefits of deploying this advanced equipment and valuable experience into their workflow. A subcontract manufacturing partner does custom manufacturing and allows flexibility; a company can continue producing its standard products while adding value and customizing its designs to create a unique product for a specific customer.
Opponents of contracting out manufacturing functions argue that the downside of doing so could be due to a lack of QC or quality control, lack of control over project management, and lower innovation possibilities. As we have seen, contract manufacturing has only continued to grow and has become a successful strategy that organizations in all manufacturing sectors have successfully pursued. From start-ups to large companies, outsourcing remains a tool of choice to gain a competitive advantage in many business scenarios.
Added value for companies in many industries
Finding a suitable contract manufacturing partner in any business industry is a challenging process. There are many factors to consider and several decisions that need to be made to match the particular needs with the capabilities of any potential service provider.
In many industries, it is sufficient to identify a manufacturer equipped to meet the needs of a project that can deliver a product consistently on time with the required specifications and that understands and applies quality control measures according to recognized standards.
The main tips to consider when evaluating a custom contract manufacturing partner include:
- The act of proactively evaluating the potential manufacturing partner by criteria that includes the:
- Depth of the manufacturer’s experience
- Ability to access continuous consultation and technical support
- Capability to meet quality standards and regulatory requirements
- Possession of manufacturing capabilities can meet current and future production needs
- The capacity to deliver logistics support and delivery capabilities.
- Establish and agree upon clearly established objectives for both sides to stay on course and meet performance expectations. Clear and detailed project delimitation, including setting critical success factors for the manufacturing relationship can help to avoid unrealistic expectations on both sides.
- Assess whether the subcontract manufacturing partner offers flexibility to allow continuous process adjustments. Things change or evolve more frequently in the custom field, and manufacturers must be flexible and able to respond quickly. Decide from the start whether you want the contracted manufacturer to own the process or have the flexibility of a patented portable process.
- Ensure you have access and communication with people at all levels of the subcontract manufacturer’s organization. Ask if you will be assigned a lead individual and dedicated team and access to relevant experts and ongoing technical support to maximize project success.
- Establish a spirit of partnership for a long-term partnership. While it’s critical that you thoroughly evaluate the partner’s experience and ability to meet your needs, consider how well you feel the organization fits yours culturally. In the long term, subcontract manufacturing can build relationships with the cooperation and commitment of both sides.
- It may be worth considering different subcontract manufacturers in the early and later stages of a project. In this case, technology transfer agreements should be established with all parties in advance.
- Request details of the manufacturer’s QMS quality management system. A well-implemented QMS helps coordinate a manufacturer’s activities to meet regulatory and customer requirements effectively and efficiently on an ongoing basis. A manufacturing partner who has implemented a QMS will generally already have the following procedures in place:
- Detailed manufacturing and quality control protocols
- Production and process controls
- Certificate of Product Analysis
- Records of traceable product batches
- Product stability programs
- Product change notification and control processes
- Supplier evaluation and qualification program
- Equipment calibration and maintenance program
- Non-compliant product processes and procedures
- Qualified and trained manufacturing personnel
Depending on the intended use of your product, these manufacturing controls may be sufficient to ensure the constant production of your product over time. In some cases, its intended use may require additional manufacturing controls. Some other controls that may be needed can include:
- Validation of the analytical method CC
- Process validation
- Test-specific expected use quality control tests
- Product design according to design controls
When evaluating potential manufacturing partners who have implemented a solid Global Standards Collaboration (GSC), your potential subcontract manufacturing partner should be able to summarize your GSC that includes at least one reference to the attribute list above.
According to an international standard, provide certification by an independent third party, such as ISO9001, ISO13485, and ISO18385. Provide an on-site audit of your GSC, as appropriate.
An ideal subcontract manufacturing partner is willing to spend time consulting with you to ensure that the proper quality controls have been implemented to meet the product’s intended use and regulatory requirements.
Understanding the capabilities of any potential supplier in these areas is essential to making an informed decision. The market can change, expectations and technologies will change. Adaptability is crucial.
While cost optimization remains an essential criterion for selecting a manufacturing partner, it is no longer at the top of the list. Subcontracting out production, when executed well, can provide a competitive advantage by transforming the way organizations operate and making them more agile, efficient, and effective.