What is Contract Manufacturing?
Also known as outsourcing or outsource manufacturing, contract manufacturing is a type of outsourcing wherein an original equipment manufacturer (OEM), or designer, works with another manufacturing firm to have certain products, parts, or components produced. The hiring manufacturer then uses these items in its own operation or sells them under its own brand. The party manufacturing parts on behalf of another company or firm is typically known as the contract manufacturer.
When a company needs to free up more time, can design but not manufacture its own products, or simply isn’t equipped to manufacture a particular part, contract manufacturing provides an ideal solution.
Benefits of Outsourcing Manufacturing
Contract manufacturing offers several key benefits for companies seeking to outsource production, including:
- Reduced labor costs. The hiring company saves by mitigating the need to hire, maintain, and train in-house engineers and technicians.
- Lower overhead costs. The contract manufacturer handles utilities, real estate, and other ancillary operating costs and translates these variables into a lower fixed cost for the customer.
- Focusing on core competencies. By using a contract manufacturing, the hiring company can refocus time, labor, and resources on revenue-generating activities, such as marketing and sales.
- Increased scalability. The customer can request more or less product from the contract manufacturer based on demand or projections instead of overinvesting in equipment and resources for inconsistent high volumes.
Is Contract Manufacturing Right for Your Business?
If you’re considering using contract manufacturing, here are some factors to consider when determining if this model is right for your business. You may want to work with a contract manufacturer if:
- Your business doesn’t have the capital to invest in large-scale production. Contract manufacturing can help you establish your brand while controlling manufacturing expenses.
- Demand for your products is seasonal or otherwise inconsistent. Contract manufacturers can provide products on an as-needed basis, allowing you to reduce production or opt out of contract manufacturing services during the off-seasons.
- You need immediate high-quality production. Establishing new manufacturing operations can involve a lot of trial-and-error to get your designs and process right. Using an experienced contract manufacturer can help you shorten this step or possibly skip it all together.
IAI, Your Trusted Contract Manufacturer in Mexico
If you’re in need of dependable contract manufacturing services, the experts at International Assembly LLC (IAI) can meet your outsourcing needs. IAI uses a selection of Lean manufacturing tools to help our customers eliminate production waste and save time, money, and resources. Based on your specific requirements, IAI can produce the right quantity and quality of products and services when you need them.
As a premier nearshoring partner, we will work with you to get your equipment to our facility in Mexico and arrange proper sourcing of raw materials. From there, we can provide consistent production from our certified facilities, featuring significant savings compared to the costs of building an in-house manufacturing operation in the United States or Canada.
Why Outsource in Mexico?
There are a number of advantages of outsourcing manufacturing in Mexico. You can save on transportation costs such as fuel when moving goods in Mexico, and near the Mexican border. You’ll also benefit from added convenience since executive communications and travel are much easier. Unlike more distant outsourcing destinations, Mexico operates in compatible time zones with the United States.
Some of the many industries served at IAI include:
Contact the Experts at IAI for Mexico Manufacturing Solutions
IAI is here to serve as your go-to contract manufacturer in Mexico. You’ll benefit from highly qualified personnel and certified facilities that can meet your manufacturing needs. In the process, we’ll help you develop and implement a plan based on your business’s specific requirements, complying with all local, state, and national requirements. For additional information about our services please contact us or request a quote today.