In Part 1 of this blog I discussed the importance of having a well-defined process for selecting an electromechanical contract manufacturer. In that blog, I emphasized that sticking to such a process would help avoid hasty, poorly informed decisions. In this blog I share key attributes of contract manufacturers that you should consider as you narrow your list and make a selection.
Important Considerations as You Narrow the List
Every company’s needs are different but many supplier requirements seem to always be important. Among these are:
- Manufacturing Flexibility and Cost.
- Multi-location contract manufacturers are inherently more flexible than those with a single facility.
- Multi-location manufacturers also have built-in redundancy in their operations; they are much less likely to suffer a single catastrophic event that halts production.
- Contract manufacturers operating at or near capacity have much more difficulty in quickly adapting to your company’s changing requirements.
- Manufacturers with excess capacity are likely to be more aggressive in pricing their services; those near capacity have little motivation to be offer low pricing.
Low Cost Manufacturing Options.
- Look for contract manufacturers with an owned and controlled low cost manufacturing operation in Mexico.
- Unless you are buying very large quantities of assemblies, the logistics associated with Asian manufacturing will be cost prohibitive and the service levels frustrating.
- Quality and Manufacturing Certifications.
IPC 620 Trained Staff.
- The contract manufacturer you select should be building to IPC-620 standards and have the staff training documentation to prove it.
- Designed to bring consistency in the manufacture of electronic assemblies, the IPC standards serve to eliminate misunderstandings between purchasers and producers.
ISO 9001 Certified Quality System.
- Consistency or process and procedure is critical to having predictable high quality and the best way to know whether a potential contract manufacturer has a commitment to consistency and quality is if their quality system is ISO certified.
- Watch out for contractors that claim to be “ISO compliant”. This is code for having a quality system that cannot standup to the ISO 9001 requirements. After all if a manufacturer were truly compliant why would not they take the extra step of getting audited by a third party registrar to prove it.
- Manufacturing Best Practices.
Testing and Quality Control.
- It is not enough for a contract manufacturer to just have an ISO certified quality system. They must also have robust internal testing and quality control procedures.
- You should ask questions like: Does the contractor do in-process testing? How about product specific test and inspection plans? Do they maintain records of these tests and quality inspections? Can you see them?
Material Documentation and Tracking.
- Some of the most common issues challenging manufacturers at all levels relate to the sourcing and tracking of material being used. Environmental standards like RoHS and REACH have become standard requirements in many industries. Meanwhile, counterfeit material has become a major problem.
- Select only contractors that have tight controls on material sourcing and that can provide the documentation to prove it.
- It is also important to select contractors that have systems sophisticated enough to maintain material records for years and be able to tie these records back to specific production runs.
- Your business must continue to improve with each passing year and you should accept no less commitment out of your contract manufacturer.
- Choose contractors that are committed to improve and are making the investments in their people and facilities to prove it.
- Supply Chain Services
Total Cost of Acquisition.
- Regardless of the price of the sub-assembly be purchased, hidden costs like procurement, shipping, receiving, inspection, inventory carrying costs can significantly to the total landed cost.
- The total cost of acquisition can be startling different from the unit price and should heavily influence your choice of supplier.
Breadth of Services.
- Look for partners that have a strong track record of supporting kanban, just-in-time delivery, dock-to-stock, bonded inventory, and consignment programs.
- Even if you don’t need one or any of these services now, such a partner will likely bring cost saving ideas to your relationship that will benefit your organization for years to come.
Selecting an electromechanical contract manufacturer is not an easy process and one that needs to be approached with a thoughtful, reasoned, and organized plan. The benefits of many manufacturing and procurement initiatives like outsourcing and lean manufacturing hinge on the selection of contract manufacturing partners. So selecting the right partner is absolutely critical. Taking time to consider attributes of candidate contractors such as manufacturing flexibility, quality and training, commitment to best practices, and supply chain services will help lead the way to the right partner 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.