10 Primary Advantages of Contract Manufacturing

Many entrepreneurs and business owners dread the manufacturing process. Whether you’re negotiating a short run manufacturing deal or you’re trying to simplify your design to cut down on production costs, this can be a stressful time for companies. But you don’t have to go through this process alone. A contract manufacturer makes production as smooth as possible so you can focus your time and effort elsewhere.

There are 10 advantages of contract manufacturing that are particularly helpful for businesses both large and small. When you hire a contract manufacturer that can do it all, you’ll effortlessly produce high-quality products that your customers will really value.

Who Benefits from Contract Manufacturing?

Contract manufacturing is the process of outsourcing some or all of your production to a company that specializes in manufacturing. Different contract manufacturers offer different services, such as:

  • Designing or redesigning products for manufacturing;
  • Creating detailed computer models of products to aid in production;
  • Manufacturing products manually (using a skilled labor force) or via 3D printers, CNC machines, and other tools;
  • Assembling finished products;
  • Packaging products;
  • Shipping products to inventory warehouses or customers;
  • And more.

Because these services are so broad in scope, nearly every industry and business can benefit from contract manufacturing. For example, small businesses and startups outsource their manufacturing to save on overhead costs while larger enterprises use these services to simplify the production process. No matter what type of business you have or how complex your product is, there are many clear advantages of contract manufacturing. It’s a forward-thinking solution that empowers entrepreneurs to dream big and deliver groundbreaking new products to the world.

Specifications to improve manufacturing process and quality

10 Advantages of Contract Manufacturing

Even if you think you have the staff, resources, and experience necessary to manufacture your own products, contract manufacturing is usually a faster and more cost-effective option. Here are ten reasons why every business and entrepreneur should strongly consider partnering with a skilled contract manufacturer rather than taking on this process in-house.

Advantage of Contract Manufacturing

Why It’s Important 

1. Higher Quality Products  Contract manufacturers have the tools and experience necessary to create superb products. You’ll gain the expertise of a skilled team of engineers as well as advanced manufacturing tools like CNC machines, 3D printers, and precise cutting, drilling, or milling instruments. The end product will be more functional and elegant than the one you could create on your own.
2. Reduced Costs You don’t have to invest in manufacturing instruments, operators, product designers, or plant/warehouse maintenance. This keeps overhead costs low, leading to a higher return on investment (ROI).
3. Resource Savings  Contract manufacturers save valuable resources in two ways. First, they reduce waste using techniques like lean manufacturing. Less waste means more cost savings and a smaller carbon footprint. They also free up your staff’s time. Rather than focusing on manufacturing details, your staff can put all of their efforts into branding, marketing, and other important tasks.
4. Reduced Labor  To manufacture a product on your own, you’d have to hire a large staff of plant managers, engineers, operators, and skilled materials workers. By comparison, contract manufacturers hire and manage their own staff. When you work with a contract manufacturer, you’ll gain all of the benefits of a large workforce without having to hire workers, manage payroll, or schedule shifts.
5. Faster Time to Market Because contract manufacturers use the most advanced manufacturing tools and have experience working with them, they can create products very quickly. Rapid prototyping tools and CNC machining make this process even faster. You can get your product to market in as little as a few weeks in some cases.
6. Scalability  Contract manufacturers often negotiate competitive prices on bulk raw materials, and this keeps costs low even as production increases. This means that if you start off small (let’s say a limited run of 1,000 components), you can immediately scale up production without incurring significantly steeper costs. Contract manufacturers also keep a detailed log of your manufacturing preferences and product models so you can quickly scale production up or down.
7. Ideal for Startups and Small Businesses Small businesses and startups gain the greatest advantages of contract manufacturing. These companies often don’t have the resources, budget, or staff to manufacture products on their own. Contract manufacturers allow them to compete against much larger companies at a low cost.
8. End-to-End Options Some contract manufacturers offer end-to-end services, meaning that they handle the entire process from start to finish. They take care of the product design for manufacturing, material purchases, the manufacturing process itself, assembly, packaging, and shipping. Keeping the entire process under one roof reduces costs and complexity.
9. Industry-Specific Solutions Experienced contract manufacturers fill in vital knowledge gaps so you can find niche and innovative design solutions within your industry. For example, if you want to create a specialized surgical instrument, you can find a contract manufacturer that has experience making these types of products for the medical industry. The manufacturer will help you refine the design based on their years of experience in that field.
10. Accurate Cost Estimates and Deadlines  One advantage of contract manufacturing over DIY manufacturing is that you’ll know exactly what you should set aside in your budget for the entire process. The manufacturer will give you a detailed cost estimate up-front. You’re also less likely to run into unexpected costs or delays, as the manufacturer knows how much the process should cost and how much time each step should take based on past experience.

However, while there are many advantages of contract manufacturing, some manufacturers are more skilled than others. If you want to gain the most benefit from hiring a contract manufacturer, you need to find a trustworthy company that has experience in your particular field or industry.

An efficient production line with automation

How to Identify the Best Contract Manufacturer

The main advantage of contract manufacturing is that it streamlines production, and this, in turn, leads to cost savings and fewer headaches. However, you’ll only gain this advantage if you work with a contract manufacturer that understands your industry and removes all of the manufacturing obstacles you’d normally face.

Not all contract manufacturers can do this for you. Many contract manufacturers focus on just one type of service—they don’t offer end-to-end solutions. This is a major problem because it makes the manufacturing process more complex and error-prone. For example, if a contract manufacturer only focuses on mass production and doesn’t offer you any feedback on the design or material choice, then you could end up with thousands of subpar products that won’t sell.

The best contract manufacturers walk you through each stage of production. They help you with the design, offer advice on materials, make detailed computer models, prototype the design, manufacture the final product, and handle everything related to assembly and shipping. You should also seek out a contract manufacturer that knows your industry inside and out. This is especially important for industries like telecommunications, healthcare, and electronics, as these products tend to be very complex and require a high degree of precision.

A good contract manufacturer does more than just produce quality components. Top manufacturers meet with you one-on-one to discuss the issues that are relevant to your industry and make sure your product addresses those pain points. With an experienced production firm by your side, you can solve some of your industry’s most pressing challenges and become a leader in your field.

Pacific Research Laboratories is an experienced contract manufacturer offering end-to-end solutions for some of the most competitive industries in the world. To learn more about our services, visit our contact page or call (206) 408-7603.