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Applications

Many businesses rely on contract manufacturing because it represents a cost savings, and it allows them to maximize their resources and pay for the upkeep of expensive equipment.

Among the various contract manufacturing services that contract manufacturers provide are contract machining, contract assembly, and subcontracting.

Contract manufacturers have a wide variety of capabilities. Among the specific manufacturing processes contractors use are milling, sawing, planning, tapping, drilling, turning, boring, and grinding. New technologies with growing demand among contract manufacturers include electrical discharge, ultrasonic and electrochemical machining, and more.

Major companies use various types of contract manufacturing services for these jobs. Some of those industries from which these companies come include marine, automotive, aerospace, food and beverage, chemical, pharmaceuticals, military and defense, medicine and healthcare, and electronics.

Design

Contract manufacturers design goods and plan services based on customer requirements. During design and planning, they take into consideration details like product volume request, required frequency of product delivery, product quality standards, intricacy and precision of design required, custom product design requests, shipping distances, and the like.

Machinery Used

Depending on the application, contract manufacturers may use virtually any type of machinery. For example, in contract packaging, they often use machines like heat seal machines, vacuum packaging equipment, plastic molding machinery, and label dispensers.

Meanwhile, in contract sewing, manufacturers use machinery and tools like industrial sewing machines, snap setters, stud setters, grometters, zipper makers, and strip cutters.

Service Details

This is how contract manufacturing works, from start to finish.

1. Often, the company looking for a contractor starts by advertising its project and requesting bids. This is especially common in the government.

2. After looking through the bids, an original equipment manufacturer (OEM) picks a few manufacturers to which to discuss their application.

3. Based on their discussions, the OEM then decides which manufacturing company they want, and agrees to work with them.

4. Under normal circumstances, the OEM and contract manufacturing company establish a contractual agreement. This agreement specifies a particular job that the contract manufacturer must complete, and the timeframe and budget upon which they have both agreed. They may define this timeframe as hours, days, weeks, months, or years. Manufacturing contracts generally last between 3 and 5 years, although they can vary greatly depending on the nature of the project.

Sometimes, they eliminate the timeframe altogether, and replace it with a measurable output goal. Having this contract in writing is beneficial to both parties, as it establishes accountability. Also, if an OEM is working with a foreign manufacturer, these written agreements help assuage language barriers.

5. Once hired, the contract manufacturer produces goods or performs services for the OEM on a regular basis. They usually apply the OEM company logo to any goods before they ship them.