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What Is Contract Manufacturing?

Contract manufacturing is a form of outsourcing in which a company partners with an expert third-party manufacturer to create part or all of a component or assembly at an agreed-upon price for a set length of time. By allowing companies to transfer portions of their work to a reliable sub-contractor, this type of business relationship reduces the need for the project to be completed in-house, which can mean a significant decrease in labor and equipment costs for the contracting company.

Below, we provide an overview of contract manufacturing, highlighting how it works, what benefits it offers (e.g., increased cost-savings, streamlined operations, and improved productivity), and what types of products it is used to make.

How Does Contract Manufacturing Work?

After reviewing the details of the client’s request, a contract manufacturer creates a quote or estimate based on the labor, materials, and tooling costs necessary for the project. In addition to considering the amount of time and labor that will go into the project, the company provides information for projected tolerances, depending on the component material, overall component size, and required fabrication processes.
Contracting companies often request bids from multiple contract manufacturers to ensure they will get the best price. If you receive multiple quotes, make sure the estimates compare “apples-to-apples” services and offer the same level of quality. Factors to take into account include:

 

  • What is the quality of products they produce? 

  • Do they have an on-time delivery record?

  • What is their internal and external defect rate (in PPM)?

  • Do they have a robust quality system in place (e.g., is it ISO 9001:2015 certified?)

  • Do they have the experience needed to complete your project to your specs/standards?

Advantages of Contract Manufacturing

Contract manufacturing offers a broad range of advantages over investing in-house manufacturing or choosing manufacturers separately for every project, such as:

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  • Lower project costs

  • Shortened lead times

  • Full-service contract manufacturing partner

  • High-quality work

  • Background in a wide variety of industries

  • Custom project catered to your unique needs

  • The latest equipment technology

  • Friendly and helpful customer experience

  • Enhanced Product quality

  • Reduced over all build time

  • Specialised Service

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Contract Manufacturing Applications

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

  • DEFENCE

  • AUTOMOTIVE 

  • BREWERY 

  • LASER CUTTING 

  • CONSUMER PRODUCT COMPONENT

  • FOOD PROCESSING

  • AEROSPACE

  • CONSTRUCTION

  • SOLAR

  • ENERGY

  • FURNITURE

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