Posts Tagged ‘manufacturing your product’
Contract Manufacturing - Saving Time and Costs
Friday, January 25th, 2008
At some point in your life as a business owner, you are going to come to the realization you can’t do everything. While you may like to be in control of most aspects of your business, if you need parts and pieces made for your end-product, you may not have the means to do it, nor the money to build a complete manufacturing facility. This is when it’s time to turn to contract manufacturing.
In this article, we’ll take a look at the ins and outs of contract manufacturing. By the time you’ve finished reading, you’ll have a good idea as to whether or not it will work for your particular business.
What is Contract Manufacturing?
A contract manufacturer is someone you hire to create products or components for your products. If you need a machine part, statue, collectible coin, or other item that requires a lot of machinery to create, you would enter into an agreement with a contract manufacturer to create those items for you.
Is This A Viable Solution For My Company?
There are a few questions you will need to ask yourself to answer this. First, are you capable of making the part or item yourself? If not, you need a contract manufacturer. If you are able to make it, how much will it cost in base materials? Next, how much time and manpower will it take to create the item?
Once you add these things up, is it worth it for you to do this in house? Or would your company time be better spent on different aspects of the projects at hand?
After you have the answers to these questions, you’ll know if contract manufacturing is right for you.
How Much Does It Cost?
The amount of investment you will be required to put into a contract manufacturing agreement will vary with the kind of work you are having done and which parts of the job you are doing, compared to which parts of the job the contractor is expected to complete.
For example, if you are creating a commemorative coin for a special promotion, then you’ll either need artwork for the contractor to work with, or you will be charged for their artists to come up with a rendering.
Next, you’ll have to pay for a mold to be created of your piece, then a die, that will be used to cut the design out of metal.
These are all up-front costs, before the first coin is ever created.
Once production gets underway, things get much more affordable, and come down to a per-piece price. Most manufacturers will give you a complete estimate that will let you break down all those first time charges as well as the per-piece price of having your items made.
Shipping Costs
If you are making small items, then this may not be a consideration; but if you are having larger items created, you should take shipping costs into account. While the production cost may be low for the products, if the contract manufacturer is all the way across the country, or in another country altogether, then shipping fees could get out of hand quickly.
Generally, if you need a special item or product components created for your business, contract manufacturing is the way to go. While there may be some initial setup fees, and shipping fees, it is still much cheaper than the cost of the manufacturing facility you would have to build, and the labor you would have to hire, to do it yourself.
Tags: contract manufacturing, Leeia Ladipoh, manufacturers, manufacturing your product, saving time, working with manufacturers
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