In today’s highly competitive global economy, finding ways to simplify, streamline and lower the cost of production is a critical factor for the short and long-term success of OEMs. Shaving even a few pennies off the cost of production of parts and components has a positive impact on the bottom line.
One of the most effective ways to decrease and control the cost of production of parts, components or entire systems is through contract manufacturing services. These are specialized companies offering a number of different manufacturing, fabricating, and production services.
To determine if using contract manufacturing services is cost-effective for your business, consider the following issues and how they apply to your current production costs.
Set Price
With the use of a contract manufacturer, the OEM has complete transparency in how much the price per unit for production is for the specific duration of the contract. This allows the OEM to have the benefit of knowing what production costs are, without any concerns about adding in machine maintenance, labor hours, issues with downtime or other types of factors that can dramatically add to the manufacturing costs in-house.
On-Time Delivery
Not only does downtime impact the price per unit with in-house production, but it also creates a very real risk of bottlenecks in having the parts required for fabrication and assembly.
With a reputable provider of contract manufacturing services, delivery will be on time, every time. This is ideal for developing a Just-In-Time delivery schedule that helps the OEM to distribute production costs and also to balance inventory and storage.
Finally, the top contract manufacturers are able to offer a range of value-added services. This can include assembly of parts and components prior to shipping, making fabrication easier and more streamlined.
