How Does Contract Manufacturing Actually Work?

Contract manufacturing is a great method for producing high-quality products at a cost-effective price. But how exactly does contract manufacturing work? If you’ve never gone through this process, you may not be sure of what to expect.

Before you sign any contracts or service level agreements (SLAs), take a closer look at all of the steps involved in the manufacturing process from start to finish. When you know how this process works, it’s easier to find a contract manufacturer you can trust and ask them important questions about their process in advance. Being prepared and knowledgeable is the best way to control the quality of your products and make it through the manufacturing stage smoothly.

What Contract Manufacturing Can Do for You 

Contract manufacturing involves hiring a third-party company to create, manufacture, and/or assemble your product. Some contract manufacturers get involved in the process very early, helping you design a product for manufacturing and building prototypes to test before the first manufacturing run begins. Other companies focus on the manufacturing aspect exclusively, so you’ll need a finalized design ready for them before you sign an agreement.

Many product designers choose to work with a contract manufacturer because it is more cost-effective, less time-consuming, and uses fewer resources. For example, if you know what type of product you’d like to create but you don’t currently have the manufacturing equipment or expertise you need to see the project through, a contract manufacturer fills in these resource and knowledge gaps.

However, because contract manufacturing is a broad term that can cover everything from the design process to the assembly stage, you need to know exactly what a contract manufacturer offers before you sign an agreement. In the guide below, you’ll see how contract manufacturing works based on which service you need.

How Does Contract Manufacturing Work? A Step-by-Step Guide  

There are a number of different types of contract manufacturing structures and services available. To understand how contract manufacturing works, you should consider four of the most common services manufacturers offer:

1. Product design

2. Manufacturing

3. Assembly

4. End-to-end processes

Your specific manufacturing process will vary depending on which of the four services you choose. Some manufacturers give you the option to choose more than one type of service (such as manufacturing and assembly). Likewise, end-to-end manufacturers provide all of the services above and will tailor their process to your specific product.

However, even though there’s a lot of variation in the contract manufacturing process depending on which company you work with and what you need for your product, there’s still a basic set of steps that most contract manufacturers follow. Here’s how contract manufacturing works from start to finish:

1. Product Design 

Step 1 Sign a contract or SLA (including a clause on intellectual property rights).

Step 2 Meet with engineers to finalize the design for manufacturing.

Step 3 Engineers build and test prototypes; they repeat this process until you have a final prototype you’re happy with.

Step 4 Engineers store a detailed model of the prototype using CAD software or another reliable modeling system.

Step 5 Begin discussing manufacturing expectations with the contract manufacturer.

2. Manufacturing 

Step 1 Sign a manufacturing SLA if it wasn’t included in the design SLA; this includes information on manufacturing volume, cost, and timelines.

Step 2 The manufacturer creates molds and tools that will be used during the short run manufacturing process.

Step 3 The manufacturer performs a short test run for quality control.

Step 4 The manufacturer creates the final product or components, performing quality control testing after every batch.

3. Assembly 

Step 1 The manufacturer assembles each component and tests the final product’s functionality.

Step 2 The manufacturer packages the final product and prepares shipping labels based on where you want the products sent (either directly to customers or to a storage warehouse).

Step 3 You or the manufacturer send the products to their final destinations and track each shipment’s progress.

Step 4 The manufacturer hands off all documentation to you, including CAD models, prototypes, and unused molds.

Step 5 The manufacturer may keep a secure copy of important files, molds, or tools so you can quickly manufacture another batch of products in the future.

4. End-to-End Contract Manufacturing 

In an end-to-end system, a contract manufacturer walks you through all of the steps above. Another benefit of working with an end-to-end manufacturer is that they can begin and end the process at any point in the design-to-production process based on your needs. So, if you have a great design, the manufacturer can start in on the prototyping step immediately. Or, if you want to handle assembly and shipping on your own, the manufacturer will simply manufacture the products and components you need and hand them off to you for final processing. No matter where you are in the manufacturing cycle, an end-to-end manufacturer will get you where you need to go.

The First Step: Hiring an Experienced Contract Manufacturer 

Now that you know how contract manufacturing works, there’s another important step you have to take before you can begin this process: selecting a contract manufacturer you can trust. Generally, it’s best to work with end-to-end manufacturers because they can customize the process based on exactly what you need. You’ll waste less time and use fewer resources when your manufacturing process is perfectly aligned to your product design, timeline, budget, and industry.

Before you sign a contract with a manufacturer, ask them for a detailed list of their services, capabilities, and the steps they plan on taking to create your product. They should be able to provide you with a reliable ballpark estimate of not only the costs associated with each step but also how much time it will take and how they plan on controlling the quality of your products during each stage. This should all be reflected in your contract and SLA as well.

A reliable contract manufacturer takes the mystery out of the process. They’ll work closely with you through each and every step to ensure that your product meets your expectations and gets to market as quickly and efficiently as possible.