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Improving Your Business Model Through Outsourcing Manufacturing Services

Posted by Matthew Turpin on Tue, Sep 09, 2014 @ 07:00 AM

Outsourcing Manufacturing Services

In an increasingly globalized economy, it's growing more and more important for electronics companies to have the ability to reach out to new consumers by increasing capacity. At the same time, however, these businesses can't afford to add capital investment costs or lower the quality of their devices. Outsourcing companies exist primarily to fulfill this unique need. Through a strong partnership with a quality contract manufacturer, businesses can scale up, remove the more tedious and time-consuming tasks from their repertoire and put their focus on core competencies. It's because of this that so many OEMs are looking to outside help in order to prove their business models.

Why do companies hire contract manufacturers?

For the most part, electronics businesses tend to outsource elements of their operations for one or all of the following reasons:

  • Reduce Costs - From start to finish, the process of designing, manufacturing, and offering fulfillment services for PC boards is time-consuming and costly. Not only are companies required to invest the money in parts and labor, but they also must keep abreast of the latest design and assembly technologies, regularly updating and maintaining equipment. Working with a contract manufacturing company can minimize the amount of skilled labor required to actually produce the boards while also taking on the burden of purchasing and caring for machinery. This can significantly cut back on an OEM's operational costs.

  • Focus on Core Competencies - In order to stay current and to succeed, electronics companies need to be able to put their focus on what's important to their customer base, what will provide their business with a competitive edge, and where improvements can be made to increase sales while reducing costs. Unfortunately, when time is diverted away from these tasks to work on designs, revamping, prototyping, assembly, testing, and repair services, these core objectives cannot be met. Working with a contract manufacturing service can free up a company's time so that more pertinent tasks can be tended to.

  • Ensure Growth & Flexibility - The goal of any business is to eventually grow over time. A larger consumer audience means more revenue and heightened success. Many small electronics companies tend to struggle to scale up, as they don't have the means of keeping up with customer demands. Even if new buyers can be convinced to invest in their products, without the ability to quickly design and manufacture prototypes and PC boards, customer business will quickly be diverted elsewhere. Outsourcing either design or assembly processes (or both) can allow a company to satisfy their client's needs in a timely manner while still reserving the flexibility to focus their attentions elsewhere. 

Outsourcing ManufacturingGetting the Most Out of Your Contract Manufacturing Partnership

It's easy to see why many OEMs are choosing to outsource design and assembly processes, but in order for you to truly improve your business model and benefit from the partnership, there are a few things you should be looking for:

  • Experience - It's smart to contract with a service that's well-seasoned in the design and manufacture of PC boards. Look for a company that also requires a certain level of experience and knowledge from its staff.

  • Customer Satisfaction/Retention - Not only should you look into the level of satisfaction that previous customers have had with the outsource company, but you should also ask about the retention rate of clients.

  • Standards Compliance - Never work with a company that doesn't adhere to the latest industry standards for safety. 

  • Onshore vs. Offshore - Many companies are tempted to go offshore with their contract manufacturing needs, but it's important to realize that many foreign-based businesses don't follow the same standards for assembly or fair labor that we recognize in the US.

  • Fulfillment Services - You'll end up saving a lot of time and money on warranty replacements by contracting with a company that troubleshoots and repairs.

With the right partnership, you can take your electronics business to the next level faster than you ever expected. 

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Topics: manufacturing services, American based product assembly, american electronics design services