“The important thing about outsourcing is that it becomes a very powerful tool to leverage talent, improve productivity, and reduce work cycles.” – Indian business tycoon Azim Premji
This is especially true of contract manufacturing, which is a form of outsourcing. When a business is considering whether to do the work themselves or to contract out to a specialist manufacturer, there are some key considerations.
Read on to find out what speaks for a contract manufacturing solution.
What is contract manufacturing?
As mentioned above, it’s a type of outsourcing. A business enters into a formal agreement with a manufacturer to produce components or the whole product.
Within the contract manufacturing industry, you can commission anything from a single part all the way up to an assembled product. In response to market demand, contract manufacturers like us have developed a “from-crate-to-carton” offering, providing services ranging from design concepts to shipping finished products.
In New Zealand, the term contract manufacturing is often used to describe outsourced manufacturing of circuit boards and electronic parts. However, in recent years the term has expanded to include companies contracting metal fabricators like ENI to make repeatable, metal-based products.
Contract manufacturing benefits
When you outsource your project to a contract manufacturer, you not only get your project completed, but you also get the following benefits:
1. Cost management
We understand that businesses want to predict costs as much as possible. Contract manufacturing means you can get a predictable cost per unit. Whilst the cost of contract manufacturing depends on the complexity of the sheet metal project itself, you are still going to save on:
Resources – you are not using your own equipment or incurring maintenance and depreciation costs. Because they are using their own facilities and location, the contract manufacturer is responsible for it all.
Lower labour costs – if a certain component requires a team of people with different skills to complete it, you can use the experts of your contract manufacturer.
2. Access to know-how and innovation
Working with a contract manufacturer allows you to take advantage of their extensive knowledge and experience. A sheet metal contractor with a good reputation will employ excellent, skilled workers. They will have comprehensive experience in a variety of metalwork areas and will be able to provide advice, guidance, and a wealth of knowledge, as well as the finished product.
At ENI, we not only have extensive know-how in terms of metal fabrication, but also prototyping, engineering, and logistics.
3. Health & Safety
Sheet metal fabrication is not without risk to those working with it. The contract manufacturer takes all the risk of protecting the health and safety of the people working on your products.
4. Lower risk
If anything is outside the agreed specifications, you won’t have to pay for it. If you have ordered a certain number of any particular component, that is what you will receive.
When you pick the right contract manufacturer, they will have:
The physical space and equipment for high-quality sheet metal fabrication.
The responsibility of capital expenditure – another cost saving for your business.
The ability to handle logistics management from concept to shipping.
5. Flexibility
There is no need to purchase new machines or hire specialised staff if you don’t have the demand. We can handle overflow production for other manufacturers – in a way that is quick and practical. We scale production quantity with you. There is no minimum or maximum quantity.
Talk to us about outsourcing your manufacturing
Our team have years of experience in contract manufacturing, and we love to share our knowledge. If you are interested in how contract manufacturing could work for you, reach out to us.
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