For OEMs, deciding where to set up manufacturing operations will play a crucial part in the structure of your supply chain.
Some may choose to outsource parts of the early-stage production process and then bring the final production in house, whilst others will either take on all the work internally or outsource the entire project to a contract manufacturer.
Every business is unique and making a decision that is right for your company and customers is essential. However, which route to go down is a complex question with many-faceted answers.
Whilst cutting out the middleman and bringing your manufacturing processes in-house might seem like an attractive option, there are many factors to consider before taking this step. For one, setting up and running a production facility is not an easy undertaking and could prove to be a steep learning curve if you do not have the necessary expertise, skills or equipment. Plus, unless you are producing a large volume of units, in-house manufacturing is unlikely to be as cost-effective as hiring a contractor.
So, what are some of the key advantages of using an electronics contract manufacturer for your project?
Outsourcing the production process
Established and respected contract manufacturers will have years of experience when it comes to quality control and routinely perform quality checks on finished products before shipping them. They will also be well versed in project management and ensuring the process runs smoothly, so there is no need to worry about loss of quality, control or poor communication.
With a contract manufacturer, there is also the potential for significant cost savings. Outsourcing helps to reduce labour costs (the highest cost of any manufacturing process), eliminates the need to juggle vendors and stops you running into unexpected expenses. By knowing exactly what the manufacturing process will cost from the outset, you can keep better control of your budget.
Although in-house manufacturing can offer a great deal of flexibility, it is also worth pointing out that, with the right partnership, more flexibility can actually be achieved through a contract manufacturer. This is because a contract manufacturer already has the specialist equipment and resources needed to respond to market fluctuations and scale production.
Equally, another great benefit of outsourcing is speed. Thanks to close supplier relations, leading contract manufacturers will be able to source components quickly and optimise their supply chains to manufacture products efficiently.
Choosing the right manufacturer
Whether you decide to work with a contract manufacturer or bring all production in house depends on your specific needs and the resources you have available. However, for companies with limited resources or OEMs looking to make their product the next big emerging technology, contract manufacturing is undoubtedly the way to go.
It is also important to note that any disadvantages of outsourcing are mostly related to the supplier’s ability to deliver on their promise. Fortunately, issues can easily be mitigated by choosing the RIGHT manufacturer. As with any business deal, you should do your research and ask the right questions to ensure you are entering into a contract with a reliable and reputable manufacturing company.
For those companies, giving up some production control will be a small sacrifice for the comfort of having a specialist manufacturer on hand who can provide you with the technical insight, experience and skills needed to prevent fatal mistakes and ensure a consistently high-quality product.
EC Electronics is the UK’s leading electronics manufacturing services provider for OEMs. Contact us today to see how we can help take your project to the next level.