Insider Tips: How to Choose a Contract Manufacturing Partner

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Bringing a new product to market? Need to expand your capacity? Here’s how you can pick the right contract manufacturer and make the most of that relationship.

Companies may choose to work with a contract manufacturer for a number of reasons. They may not have the capacity to produce the volume they need, or don’t want to make a capital investment or spend more on labor. They may have decided that given their value stream, a particular product line doesn’t fit with their process flow any longer. For entrepreneurs with an idea for a new product, a contract manufacturer can provide expert guidance through the entire process, from design, prototyping, bringing the new product to market, and through ongoing production.

Choosing the right contract manufacturing partner is important—choose wrong, and you run the risk of losing money and potentially even customers. We’ve outlined the most important considerations to help you research and select a contract manufacturing partner that will meet your needs, and tips for getting the most out of your relationship.

Choose the Right Type of Shop
Contract manufacturers typically fall into different categories based on their equipment, processes, and production volume capabilities. It’s important you choose the right type of shop for your specific product and the volume you’ll need produced.

Low mix, high volume manufacturers could deliver products multiple times per day, and thousands of products per month (think fifty cent brackets). Sometimes, companies will choose offshore contract manufacturers to fulfill low mix, high volume needs, though quality, lead time, and storage of inventory become important considerations in this case.

Conversely, high mix, low volume shops are ideally suited for customers that have low volume needs. These shops typically manufacture 5, 10, 50, 100, 200, 500, or 1,000 pieces at a time and deliver 100 per week, 100 per month, or perhaps 250 per quarter. These shops should be agile and well invested in modern technology. If you have low-volume product needs, you should not consider offshore contract manufacturers, as they generally require a high-volume order to provide cost savings.

Ask for Referrals
If you’re new to manufacturing, you may not even know where to begin looking for a contract manufacturer. We recommend starting with your network: ask those you trust, such as your accountant, business banker, or attorney for a referral. Schedule a meeting with the contract manufacturer and be prepared: the first meeting is important, and you’ll learn a lot about whether or not they’re a good fit for you and your product.

Initial Meeting
During the initial meeting, be prepared to share as much information about the product as possible. If it’s just an idea at this point, bring along your “back of the napkin” sketch. If you’ve already had engineering drawings prepared, bring those. If you have a prototype, bring it. If the product is new, be prepared to share your vision for the product. How do you want it to look and function? How many will you want to produce? How quickly do you expect to ramp up production? Be prepared for the contract manufacturer to ask: is it funded? Without funding, you’ll have a harder time finding a contract manufacturer that will be willing to partner with you.

Questions to Ask
Determining whether a contract manufacturer can design and / or produce your products will depend primarily on the equipment they have, their capacity, and their processes, but there are a number of other considerations you should also take into account. Consider asking the following questions:

Can their equipment meet the tolerances your product needs?

How new is their equipment? If a contract manufacturer hasn’t invested in new equipment, it may be a red flag.

What processes would they use to manufacture your product?

How efficient are their production processes? What is their throughput? Determine whether they will be able to scale up production if needed. If you are planning a higher production volume in the future, have this conversation with the contract manufacturer early on. It may require they make an investment in capital equipment to grow with you, and you’ll want to know if they will be willing to do that.

How much of the product will they be able to manufacture themselves, and what processes would they outsource? What value-add services do they offer? Can they provide in-house assembly, packaging and shipping, Kanban inventory management? The more a contract manufacturer can vertically integrate the production processes for you, the better, as you’ll have greater control over the timing, quality, and costs.

What certifications do they have? At a minimum, they should be ISO 9001:2015 certified. This certification means they follow a standardized process. They’ve had to undergo initial certification, an annual review by an ISO certified consultant, and recertification every five years. Depending on your product, your contract manufacturing partner may also need to have additional certifications such as the ISO 13485, which evaluates their Quality Management System’s appropriateness and effectiveness for manufacturing medical devices.

Are they financially stable? Along with financial stability, investigate the overall stability of the company. How long have they been in business? Does ownership change frequently? Do they have a succession plan? Ask about their vision for the future—do they have growth goals? What are they doing to improve and invest in their business to better serve customers?

Ask for references. Along with asking for references, ask them to tell you about some of their current customers. Pay attention to how they describe those relationships. Do they illustrate ways they’ve added value for those customers, made product improvements, improved efficiency, and shared cost savings? Ask about their customer mix and look for an experienced company that has both long-term and new customers.

How will they simplify the supply chain for you? Will they source raw materials? Manage supply chain inventory? Do they use Kanban? Ask what the contract manufacturer does for other customers.

What are their sustainability practices? Metal fabrication is an inherently sustainable industry because nearly all the metal used is either made into a product or scrapped and remade into metal sheets again. However, contract manufacturers can and should embrace additional sustainability practices. At Mathison Manufacturing, we don’t use oils that need to be disposed of. The oils we use on our break press are recycled and used on the punch press, then sent off for recycling. We have moved to a nearly paperless process and the paper that we do use is recycled. And, we upgraded our lighting to use more LEDs and better fluorescents to provide a better working environment for employees and to reduce costs.

What documentation will be used? If you don’t have engineering drawings already, your contract manufacturing firm should have an engineer who can prepare them for you. They should also be prepared to provide you with First Article Inspection (FAI) documentation if needed. Finally, they should be willing to sign a non-disclosure agreement (NDA) upon your request.

If we were to work together, how will you communicate with us? Effective communication is one of the cornerstones of a productive contract manufacturing partnership. Poor communication can lead to missed deadlines, added costs, and heaps of frustration. Your contract manufacturer should clearly outline timelines and costs and communicate with you throughout the manufacturing process to ensure expectations are met.

Take a Plant Tour
The plant tour is a vital part of the vetting process. During the plant tour, you’ll get to witness the shop in action firsthand, and it can provide some clues about the contract manufacturer’s operational excellence (or lack thereof) and fit for your business. During the tour, pay attention to:

The shop’s equipment

The cleanliness of the shop floor

The process and flow of products through the plant

Staff members’ attitude and demeanor

If possible, try to talk with staff you meet during the plant tour. Do they seem engaged? How long have they worked there? What are their qualifications? Poor morale and high turnover are red flags and could result in quality issues, loss of efficiency and ultimately missed deadlines, and could indicate deeper issues within the company.

The plant tour is also an excellent opportunity to gain insight into how the contract manufacturer views their customer relationships. As you view their samples, pay attention to the narrative they share about each product. Are they highlighting feature enhancements they made to a product? Ways they saved the customer money or time? How they collaborated with the customer to meet their needs?

Making a Decision
As you consider how the initial meeting and plant tour went, think about the technical fit (equipment, processes, staffing, etc.) and the cultural fit. Consider your first impression. Did the team you met with convey openness, honesty, and a genuine excitement to be meeting with you? Did they express a willingness to collaborate and partner? Did they ask thoughtful questions, and even offer helpful suggestions? Did they feel like a good fit, like they could be a natural extension of your team?

If a contract manufacturer tells you “yes” too quickly, that might be another red flag. Successful contract manufacturers will follow their own careful vetting process, and only take on work that’s truly a good fit rather than saying yes to any work available and then scrambling to try to make it work. You want to get a genuine—not overblown—sense of confidence from the contract manufacturer that they can make your product. When contract manufacturers overcommit, their customers lose.

Finally, once you receive a bid, beware of companies that overpromise or seem to offer a low-bid quote. If it seems too good to be true compared to other companies you’ve met with, you run the risk of encountering quality issues, problems with getting parts, or meeting production and delivery deadlines. When evaluating bids, pay attention to the total cost and evaluate what you’re getting (quality, service, etc.)—not just the bottom dollar.

Getting the Most out of Your Contract Manufacturing Partnership
Once you’ve hired a contract manufacturer, there are a few things you can do to ensure the relationship gets off to the right start. There are also things you can watch for to help you feel more confident you’ve chosen the right partner.

Prototyping
If you have a new product, you may need your contract manufacturer’s help in developing a prototype. Here’s where you can take advantage of their expertise to help you design a winning product.

An experienced contract manufacturer will help you design for manufacturability. First, they’ll address the practicalities: is it physically possible to make your product? The unfortunate reality is that sometimes entrepreneurs develop an idea for a product, but it’s physically impossible to make.

Your contract manufacturing partner should also be focused on costs: what materials will be needed to manufacture the product? What processes will need to be followed? How labor intensive will it be? What tooling will be required? What is really needed for tolerancing? Be open to feedback—if you’ve chosen correctly, your contract manufacturing partner will be looking out for your best interests during this process, and making recommendations that will benefit you both.

As you begin the prototyping process together, engineering staff will develop engineering drawings from whatever sketch or drawings you already have, then put the job out on the floor. Then, depending on the complexity of the product, there may be additional revisions made to adjust for form, fit, functionality, design, and design for manufacturability. At this point, your contract manufacturing partner will also be looking for your feedback. Do you like it? Does it still include all the important features marketing needs? Can you live with the changes that have been made? From here, you may be ready to move right into production, or work through additional iterations.

Communication
Your contract manufacturer should help you get to market quickly without sacrificing quality. The best way to do this is through frequent communication. The engineers from both teams should be meeting frequently, especially in the beginning. Your contract manufacturer should be willing to invest time up front to understand your goals and expectations, to determine the best approach, and to find ways to work together efficiently. You should regularly discuss timeline and collaborate on ways to keep things moving. Good communication from you, the customer, also helps set the relationship up for success. Keep in mind that while most contract manufacturers will try to be nimble and flexible, making changes at the eleventh hour can be challenging, so if you’re planning changes to the product, communicate those as early as possible.

Feedback
Your contract manufacturer should invite you in for a pre-production meeting to set expectations, and for a post-manufacturing review to discuss what worked, what didn’t, and how to improve. During these meetings, don’t be afraid to give feedback; and be open to feedback yourself. Remember, this is a collaboration and both companies want to succeed.

Competitive Edge
Your contract manufacturer should be helping you remain competitive by passing along savings when they can. Metal prices fluctuate, and when prices come down, your contract manufacturer should be passing some of those savings on to you. If there are process improvements that lead to efficiencies, your contract manufacturer should also share some of those savings. A reputable contract manufacturer (and a good customer) know that both companies need to be profitable in order for both to succeed.

Design for Excellence
Details matter. Your contract manufacturer should be looking for ways to surprise and delight you with product improvements of any scale. They’ll be in a great position to recommend product improvements—whether that’s making the product smaller, sleeker, stronger, or better looking. For example, Mathison Manufacturing had a customer who wanted their Made in the USA logo to be more readable. Their former vendor had been pad printing the logo, and it looked flat. We worked with our screen printer to develop a way to paint the product, screen print it, then form it inwards without cracking the paint. This innovation resulted in a beautiful, readable “Made in the USA” logo, wowing the customer.

On Time, On Spec
The biggest indicator that you’ve made the right decision is whether or not the contract manufacturer is delivering your products on time and to the specifications. If they’re not— especially right out of the gate—there’s cause for concern. Address these concerns honestly and be open to collaborating on a solution.

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When it comes to choosing a contract manufacturer, do your homework. Get a referral from a trusted source, ask thoughtful questions during the initial meeting, make time for a plant tour, and evaluate bids carefully. And remember, while technology and equipment, processes, and price are important—don’t forget to consider total cost, a company’s track record, and company culture when determining fit.

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