Selecting a Contract Manufacturer Part 1

There are many good reasons for changing electromechanical contract manufacturers, but that doesn’t make the transition any easier. Valuable time goes into researching and evaluating potential manufacturers, establishing relationships, and defining expectations. Trends like outsourcing and lean supply chains have boosted business efficiency, but these benefits can only be realized with the right manufacturing partners. Which is why finding the right partners is essential.

Contract manufacturing partners must be reliable, competent, and qualified and meet targeted financial goals. When a partner’s services are unreliable or subpar, it’s time to evaluate outsourcing options. Indicators that a contract manufacturer change may be needed include if the contractor:

• struggles to meet cost reduction requirements,
• routinely misses delivery dates,
• has chronic quality issues,
• fails to meet or is unaware of special industry standards and requirements,
• has trouble responding to and managing product changes and modifications,
• strains to support your company’s growth, and/or
• is not financially sound.

If any of these indicators sound familiar, it may be time to seek a new partner. The process of selecting a new contract manufacturer becomes less stressful when selection criteria are clearly defined.  When selecting new electromechanical contract manufacturer, consider the following.

Clearly Define Your Needs

• What products are to be purchased?
• What production capabilities are required to produce these products? 
• What does the supply chain need to be for these products (kanban, vendor managed inventory, consignment programs, etc)?
• What type of supplier quality system is required to assure the consistency of these products?
• What are your lead-time requirements?
• What are your landed cost targets?

Identify Potential Partners

• Does your company have any approved suppliers with strong track records that can meet the needs defined above? 
• Conduct a search to find new potential sources.
  • The Wire Harness Manufacturers Association maintains a list on its website (www.whma.org).   
• Build a list of three to five strong candidates.

Confirm Supplier Qualifications and Narrow the List

• Request specific proposals.
  • Make sure all are responding in a common format so that the proposals are more easily compared. 
  • Allow each supplier to make recommendations on how they could improve the program and/or lower your total costs.
• Check references.
  • Make sure the references are from OEMs with similar requirements.
  • Remember that past performance is always the best indicator of future results.
• Interview the candidates.
  • Meet in your office.
  • Conduct site visits.
• Narrow your list.

Perhaps the most important take-away from this blog on contract manufacturer selection process is to have just that…a process.  Far too often we get distracted by other aspects of our job and end-up making hasty decisions based on incomplete information. Or worse yet, forget or set aside core goals just to get a decision made.  So define your process and stick to it! 

Look for Part 2 of this blog where we will discuss ways to narrow the list and pick the best electromechanical contract manufacturer for your organization.  

About the Author

David Copenhaver is President of RESCO Electronics, a Baltimore based manufacturer electronic assemblies and value added reseller of auto ID equipment to original equipment manufacturers. Before joining RESCO in 2003, David was the Senior Vice President of Operations and member of the Board of Directors for US Office Products, a publicly traded distributor of office products that is now part of Staples.

Beginning in 1989, David co-owned and managed The Smith-Wilson Co., an Orlando based distributor of office products that was sold to US Office Products in 1996.

David has a Bachelor of Science in Electrical Engineering and a Masters in Business Administration both from the University of Virginia. He is married and lives in Arlington, Virginia with his wife and three sons.