How to Choose a Contract Manufacturer?

Selecting the contract manufacturer (CM) you will work with is a crucial decision for your business. This is typically a board-level decision and it is important to research in advance. Once your company decides on a manufacturer, changing this decision can be expensive, time-consuming, and potentially brand-damaging. With the right list of qualifications, selecting a CM won’t require endless investigation and analysis. A checklist can help you find the best fit for your company. Product Resources points out these characteristics to look for:

Capabilities

A summary of services will provide an overview of the CM’s abilities and types of work they do. This preliminary information will often determine whether a company should be placed on your short list. As you review their capabilities, ask what work they will do themselves and what they will outsource. Contract manufacturing capabilities vary, so remember to compare your needs to a potential partner’s specific capabilities.

If you have not designed for manufacturability yet, this will be a key capability to seek from a manufacturer. Design for Manufacturability (DFM) is designing the product in a way so that is easy to manufacture. When you submit your initial drawings, a contract manufacturer who’s skilled in DFM can find ways to optimize part dimensions, materials, manufacturing techniques, and delivery schedules. If you need DFM services, find out what they entail. Some companies are stronger than others in this key competency.

Experience

Experience can be determined through their portfolio, years in the industry, and special certifications. Find a firm that has a proven record of success in your field. Then eliminate any CMs that cannot prove this expertise and provide some form of guarantee. Look for comparable products to yours that the CM has produced. Does the manufacturer have the test engineering and technical/troubleshooting capabilities to solve, or at least assist in solving, problems that arise during early production and volume production?

Process

Every CM will have their own methods of doing business. Contract Manufacturers are likely to approach the design and manufacturing process a little differently. Take time to evaluate their process and see how it matches your own business operations. Does the process give you enough transparency with sufficient reviews and sign-offs? Will you have opportunities to adjust schedules and budgets, or change direction if needed? Lastly, examine your team’s availability to assess performance during the process.

Equipment/Technology

A contract manufacturer needs to have a broad depth of knowledge, as well as technologies at their disposal. These may include powder filling, liquid filling, drug encapsulation, injection molding, and blister packaging services, etc. It’s also important to have the necessary registrations and licenses in place to be able to offer these services. The CM’s ability to leverage knowledge of their technologies and make informed decisions for the best path to market, will add value to the partnership.

Regulatory Compliance

Regulatory compliance is necessary for every product development assignment. It needs to be addressed directly and early in the process. Ask the CM what measures are taken when a product doesn’t meet compliance standards. Research compliance process and how your product will be introduced to the regulatory agencies. Requirements for health, safety and environmental compliance vary between countries. Ask about a CM’s regulatory experience in the countries you plan to distribute your product.

Capacity

In finding the right CM, you need to know that the selected company has the bandwidth to handle your project. Ask if you will be their largest or smallest client. Both extremes could be red flags. If you are the largest client, will this be the first time their company has handled a project of this size? If you are the smallest client, will you get the attention you need? You will need to research if the company has the right amount of physical space for assembly and storage. Ask if personnel will be dedicated to your project or if teams are shared across different projects.

Location

A manufacturer with strategic locations is a must. If the manufacturer is outsourcing some of the sub-components, it may be developed at several locations. So, the real question is where the final assembly and testing will take place. Location is often viewed as domestic vs. offshore which could cause issues in political, language, shipping and cost ramifications. Where is your market compared to where the manufacturer is located? Transportation can greatly drive up the cost if the co-packer is not located in your market area. Location can also be a comfort level concern as well. Sometimes you want to be able to visit the manufacturer to see the operation firsthand or to meet face-to-face with your project manager.

Financial Stability

Knowing the chosen company and its suppliers are in good financial shape is a must. Risk assessment analysis on potential contract manufacturers will look for potential disruptions in the manufacturing process. These disruptions can be caused by many factors – unrealistic expectations, equipment failure, inventory mismanagement, subcontractor delays, raw material shortfalls, natural disaster and more. Financially challenged manufacturers may find it necessary to make staff cuts with your project or may suffer supply chain interruptions because of slow or inconsistent payments. Look for a CM with a stable team of seasoned experts.

Conclusion 

The review process for selecting a contract manufacturer is long and comprehensive. As your company grows and you expand your product lineup, you may want assorted sizes and various kinds of products or packaging. If a manufacturer has a whole menu of things they can offer, it may be a better fit for your growing company than a CM that can only do one thing. Some manufacturers can also help you extend your brand. They may have resources in warehouses and distribution, or gaining licensed partners in different channels. Look for a CM that has your best interests in mind and will guide you through the manufacturing process. A partnership with a contract manufacturer should be strategic and based on research and team compatibility.

2018-01-04T23:51:21+00:00

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