Redefining today's Contract Manufacturing with Supply Chain Management

Date of publication: 10.11.2020

What comes to mind when you think about prosperous contract manufacturing? Is it a combination of a real understanding of a third party's need, a savvy engineering team, and reliable processes?

Some might say all of these and chase that Holy Grail - the famous five nines - to reach the highest availability level. Ultimately, high-quality manufactured goods become not only a potential competitive advantage but also transform into a standard requirement for the electronics industry. Now, maintaining the continuity of supplies and the availability of components seems more relevant than ever. How exactly does Supply Chain Management redefine today's Contract Manufacturing?

Redefining today's Contract Manufacturing with Supply Chain Management

Contract Manufacturing - the one we used to know

People recognize Contract Manufacturing as outsourcing goods' manufacturing to an external partner to assemble designated parts or even to build an entire product. And indeed, this definition is correct. For someone who expects that an Electronics Manufacturing Services provider is responsible for turning the customer's vision into a physical product, it may be a simple process. However, the list of do's and don'ts for the manufacturer can often result in a comprehensive guidebook. Therefore it's definitely advisable to outsource this kind of service to a professional partner.

The Advantages of Contract Manufacturing:

  • Less Capital investment - you don't have to develop your manufacturing plant and invest in training and retaining employees.
  • Time-saving – this process cushions businesses; however, establishing this can be very time-consuming at the beginning. With the company that has it already done, you can easily seek new business opportunities instead of drowning in tons of papers, meetings, and excel sheets.
  • Safety - you are safe to focus on your core business while your EMS partner will take good care of everything else. Another key thing ensuring customer safety is the certainty that the final product will be delivered on time, compliant, and at the agreed price.
  • Manufacturing scalability - if there is a need for larger volumes, you can quickly extend your production capacity. Flexible production process management, adapted to the required batch quantities, helps customers avoid unnecessary stocks.
  • Less bureaucracy - your EMS provider can support your product's certification, which is essential to ensure that its quality complies with international standards and any other necessary safety regulations.
  • Quick Time To Market (TTM) - professional contract manufacturers have vast competences on board, which help in the quick verification of component selection. The complete process from product design through new product introduction (NPI) to mass production speeds up the overall TTM.

Contract Manufacturing - volume production
Contract Manufacturing - final assembly and box build

Contract Manufacturing – the one that Electronics Manufacturing Services customer needs

Different contract manufacturers have a different approach to how to manage their processes internally. However, the COVID-19 outbreak has unveiled the gap in the supply chain of electronic components. We observed the first fallouts on the European market in mid-March. During this time, the remaining stocks in assembly plants, supplied by Chinese factories, started running out. As a result, all manufacturers of electronic devices faced the challenge of maintaining continuity of production. Therefore, material management is of fundamental importance because it directly affects the supply chain's operational efficiency. The last thing that any customer wants to hear is that the purchasing of components is delayed or even impossible.

Managing the supply chain should be one of the key assumptions in the Electronics Manufacturing Services company. Moreover, it should include a set of all the correlated activities between all partners involved in the entire logistics process, i.e., manufacturers, suppliers, and finally, customers and all the intermediaries in the company's various stages of logistics. That's how Supply Chain Management redefines Contract Manufacturing - we see it not as a single silo but as a part of the larger whole. Such an approach leads to thinking about manufacturing as an entire life cycle. Manufacturing plants and Procurement no longer function as two isolated modules with limited communication. They become one coherent entity, where rapid reaction to changes, reducing risk, and maintaining the continuity of supplies are the main principles – the pillars of Supply Chain Management.

Contract Manufacturing with Supply Chain Management (SCM) – the one VECTOR BLUE HUB strives for

At VECTOR BLUE HUB, we know that Contract Manufacturing is just the tip of the iceberg in delighting customers with best-in-class services. The essential parts stay hidden behind the curtain, such as material planning, seeking new partners, or keeping Bill of Material (BOM) at a reasonable level. Thus, the better we manage our supply chain at the beginning, the better the results we can get at the end of the process. 

To preserve the highest quality of our electronics manufacturing services' provided components, we established a professional verifying system for future suppliers in engineering and logistics. We take special care in selecting potential suppliers to ensure business continuity, repeatable contract manufacturing services, and the security of the projects we conduct.

VECTOR BLUE HUB planning process - material purchasing

What's more, we adjust manufacturing processes to each project to optimize them based on Kaizen philosophy and Lean Manufacturing. Our Quality Assurance team makes sure that each stage of the process, including meeting the requirements, box build, logistics, and service, is adequately supervised to eliminate the risk of creating a non-compliant product.

If you are ready to launch your product and all you need is a reliable partner who will turn your vision into a physical product, we are here for you! Make sure to get in touch with us by filling out the form below, and our experts will get back to you shortly.

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