A contract manufacturer ("CM") is a firm that manufactures components or products for another "hiring" firm. Many industries utilize this process, especially the aerospace, defense, computer, semiconductor, energy, medical, personal care, and automotive fields. Some types of contract manufacturing include CNC machining, complex assembly, aluminum die casting, grinding, broaching, gears, and forging and complex electronic packaging, manufacturing and assembly.

In a contract manufacturing business model, the hiring firm - typically an OEM - approaches the contract manufacturer with a design or formula. The contract manufacturer will quote the parts based on processes, labor, tooling, and material costs. Typically an OEM will request quotes from multiple Contract Manufacturers. After the bidding process is complete, the hiring firm will select a source, and then, for the agreed-upon price, the Contract Manufacturer acts as the hiring firm's factory, producing and shipping units of the design on behalf of the hiring firm.

Many well-known companies use contract manufacturing as an alternative to operating and maintaining their own factories. Contract manufacturing can be used for anything from single components to a complete product. Printers, computers, cellular phones, and personal care products are all examples of products that are made using this method.

In an international context, establishing a foreign subsidiary as a Contract Manufacturer can have favorable tax benefits for the parent company, allowing them to reduce overall tax liabilities and increase profits, depending upon the activities of the Contract manufacturer.

Realizing the Potential

Businesses today thrive by focusing on what they do best and leaving the rest to others. Contract manufacturing seems to fit neatly into this practice. In addition to allowing companies to focus on core competencies, contract manufacturers offer numerous other advantages over in-house manufacturing, including lower costs, flexibility, access to external expertise and reduced capital.

It is important that Original Equipment Manufacturers ( OEMs ) and Contract Manufacturer relationship from the start have expectations set that are real and manageable.

Cost savings pass from the contract manufacturers to the customer in the form of flexibility and inventory costs. Contract manufacturers do not always have the presumed influence with suppliers since original manufacturers often select the suppliers. Flexibility can be compromised by the contract manufacturer’s focus on low costs and low inventory. And although using contract manufacturers often ties up less capital on paper, the numbers need to be offset against the inventory holding costs included in contract manufacturers’ charges.

It is never easy to manage complex relationships and Contract Manufacturing and OEM relationships are no exception . Ideally, the parties would create perfect plans that would make it possible to manage the relationship through service-level agreements linked to a set of key performance indicators.

Such challenges may tempt businesses to keep manufacturing in-house, but the potential of contract manufacturing is too great to ignore.

Instead, organizations need to take a strategic approach to contract-manufacturing relationships. In this article, the authors explain how businesses can do this by rigorously assessing when and why to use contract manufacturers, setting the appropriate working model and developing an effective organization.

TurnkeySolutionsNow.com specializes in Electronics Manufacturing Services (EMS ) and have a leadership role. We offer complete design, engineering, and manufacturing services to aerospace, automotive, computing, consumer digital, industrial, infrastructure, medical and mobile OEM customers. We help customers design, build, ship, and service electronics products worldwide by combining the advantages of a vertically integrated service offering with the benefits of a global, low-cost manufacturing base. We enable customers to optimize supply chain operations, accelerate time to market and time to volume, and reduce capital investments and production costs.

• Surface Mount Technology
• Conventional Thru-Hole
• Consignment or Turnkey
• Prototype to Production
• Chip On Board or COB, Chip On Flex or COF, Plated Thru – Hole Technology or PTH and IC Assembly Ball Grid Array or BGA , micro Ball Grid Array or u BGA
• Flip Chip Attach or FCA
• Wafer Thinning, Sawing, Inspection
• Die Attach by Epoxy or Eutectic
• Wire Bonding by Aluminum Wedge, Gold Wedge, Gold Ball
• Wire Bond Pull, Die Shear and Die Encapsulation
• Ceramic Packages, Side Brazed, LCC, J-Bend, SOIC, PGA, Flat Pack, Cerquad, TO-Header, Cerdip, Leaded Chip Carrier
• Turnkey and Consigned Assembly offering Design for Manufacturability or DFM , Material Logistics or MRP and Capacity Planning or CRP
• Low to High Volume
• 24 Hour, 2-3 Days Quick Turn Services
• BGA, FPGA, Fine Pitch Components
• RoHS Compliance
• Mixed Technology
• Proto-Types
• Quick Turn
• Turnkey Solutions

We also offer Testing in:

• Flying Probe
• Functional Test
• Debug
• Full System Test
• RF Test
• Temperature Cycling
• Production Test
• Automated Optical Inspection (AOI)
• X-Ray BGA
• ESS Test
• Cable Scan Test

We can also offer Contract Manufacturing Services in the following:

• Sheet metal Box Build
• Electro-Mechanical Assembly
• Cable Assemblies
• Automotive wiring harness
• Wire harness
• Electrical wiring harness
• Electric motor wiring diagram
• Motor repair
• Power supply manufacturing
• Circuit board repair
• Printed Circuit Board Fabrication

We are a leader in high-density, multilayer printed circuit board manufacturing. Our sources manufacture printed circuit boards on a low-volume, quick-turn basis, as well as on a high-volume, production basis. We support the concept of accelerated transition from prototype to volume production. Our Sources have printed circuit board fabrication service capabilities in United States and Asia.

Systems Assembly and Manufacturing

We believe just-in-time, ship-to-stock, and ship-to-line programs, continuous flow manufacturing, demand flow processes, and statistical process controls. As OEMs seek to provide greater functionality in smaller products, they increasingly require more sophisticated manufacturing technologies and processes. By investing in advanced manufacturing equipment and innovative miniaturization, packaging, and interconnect technologies, we can offer a variety of advanced manufacturing solutions.

We offer a comprehensive set of custom electronic enclosures and related products. These services focus on functionality, manufacturability, and testing. They are integrated with other assembly and manufacturing services to provide customers with greater responsiveness, improved logistics, and overall improved supply chain management.

We benefit from inventory management expertise and volume procurement capabilities, which contribute to cost reductions and reduce total cycle time. Through a manufacturing resources planning system we strive for real-time visibility on material availability and real-time tracking of work in process. Electronic data interchange allows customers to share demand and product forecasts and deliver purchase orders while also assisting suppliers with just-in-time delivery and supplier-managed inventory.

Serving the Following Industries:

• Fiber Optics
• Optoelectronics
• Military & AeroSpace
• Security
• Medical Device
• Datacom
• Telecom
• Automotive
• Industrial
• Test and Instrumentation
• LifeSciences & Biotech
• Capital Equipment
• Semiconductor
• Consumer Electronics