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Engineering Value ThruContract Manufacturing

The Benefits of a Successful Partnership with a Contract Manufacturer

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Introduction

As the world of manufacturing grows more complex,

and logistics become more challenging than ever,

many organizations are exploring the advantages of

partnering with a contract manufacturer. Contract

manufacturing, also known as outsourcing, consists

of hiring a third-party to perform functions that

organizations may not have the time, space, equipment,

or expertise to handle in-house. In certain scenarios,

a contract manufacturer can become an integral part

of an organization’s operating strategy by delivering

turnkey manufacturing solutions.

In this eBook we explore the benefits of a successful

relationship and how selecting the right contract

manufacturer can help to lower costs, provide flexibility,

utilize expertise, and improve focus.

Companies often choose contract manufacturing for a few primary reasons, all of which make it easier, less expensive and more efficient to bring new products

to the market and distribute them broadly.

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Cost Savings

Contract manufacturing is an advantageous

outsourcing procedure that keeps business and

overhead costs low. Because most contract

manufacturers offer “one stop shopping” to

organizations, those organizations are then freed

from the capital investment, personnel, and other

costs associated with keeping these functions

in-house.

By partnering with a contract manufacturer that

already knows the manufacturing process, you can:

• Save on capital expenses such as facility and production equipment.

• Save on labor costs such as wages, training, and benefits.

• Significantly lower your operating expenses.

• Allocate your saved funds towards your unique value and core competencies.

• Have access to more cost-effective sourcing.

• Reduce regulatory requirements and costs.

• Eliminate liability on import/export policy errors.

Most importantly, the cost savings can be passed

along to your customers which will help you gain

a competitive edge in the marketplace. Lowering

the price for customers will, in the end, mean more

sales for you.

In some scenarios, contract manufacturing has been able to cut down on labor costs by 20-30%

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Flexibility

The decision to partner with a contract manufacturer is

made due to the flexibility it affords. This flexibility not

only improves the operations of an organization, but it

can also have a positive effect on the bottom line.

By partnering with a contract manufacturer,

organizations can seamlessly scale their operations

in response to market demand. This means that no

matter the level of demand, they will always be able to

meet your customers’ needs. This, in conjunction with

having the ability to easily break into new markets and

change priorities/schedules in response to any issues,

ultimately puts organizations who utilize contract

manufacturers in the position to outmaneuver their

competitors. Additionally, contract manufacturers

allow organizations to be more financially flexible. By

freeing up funds which would otherwise be reserved

for capital investments (i.e.: facilities, machinery),

organizations can now divert money to sudden,

high-priority needs.

By partnering with a contract manufacturer, organizations can cut down their time to market; saving anywhere from 12 to 24 months.

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Expertise

Most of the time when a business is successful, it is

likely attributed to product performance, and that

is something that should never be compromised.

Therefore, when deciding to design and manufacture

a product, it makes perfect sense to partner with a

company that has experience and expertise – both of

which a reputable contract manufacturer will have.

Contract manufacturers naturally build up and preserve

a vast pool of knowledge. This knowledge spans from

knowing which material would be most efficient to

understanding – thru their various relationships –

which suppliers and methods will best meet product

timelines without jeopardizing any engineering, quality,

or logistics. Additionally, as the industry is seeing,

modern manufacturing requires plenty of technical

knowledge to function smoothly. Outsourcing to a

contract manufacturer enables you to leverage the

latest technologies which will ultimately lead you to

providing better service to your customers without

incurring the hassle and costs of making expensive

technology upgrades.

The expertise of a contract manufacturer will ensure that you do not make critical mistakes that cost time, money, and possibly the integrity of your product(s).

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Focus

It is important that every business plays to its

strengths. For this reason, many organizations turn

to contract manufacturing. By partnering with a

contract manufacturer, organizations free themselves

up to focus on their strengths and core competencies;

ultimately allowing for high-level efficiency and

productivity.

By partnering with a contract manufacturer your

organization can:

• Focus your attention on core innovation, strategic

planning, and other principal business activities.

• Keep from getting bogged down in the minutia of

manufacturing (i.e.: parts management, purchasing

and maintaining machinery, balancing schedules).

• Have access to relationships that offer cost-savings

and an understanding of how to enter a market that

may otherwise have been prohibitive.

• Concentrate on functions that drive revenue.

• Make your company leaner and more competitive:

When time is freed up, so is money.

Outsourcing the manufacturing of these items can allow you and your team to focus on bringing new products to market that meet your customers’ current needs.

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Closing

Organizations should view contract manufacturers

as business value multipliers. The combined benefits

of cost savings, operational flexibility, increased focus

on core business values, and access to vast industry

knowledge produce a compelling business option for

companies looking to manufacture their product(s).

It is important to note, however, that while contract

manufacturers provide many advantages, these

advantages can be offset if you choose the wrong

partner. Choosing the right contract manufacturer can

be a long and arduous process. There are many factors

to consider. Therefore, be sure to take care to consider

all the relevant aspects before settling on a partner.

When researching potential partners, be sure to

consider and have in-depth conversations about the

following factors:

• Capability

• Experience & Qualifications

• Capacity

• Personnel

• Equipment and Technology

• Location

• Financial Stability

(800) 951-0071(973) 263-1700

hello@panova.com panova.com

33 Jacksonville RoadTowaco, NJ 07082

With locations in New Jersey and Shanghai — Panova is an

expert in the manufacturing of molded components and bonded

assemblies and provides engineering support services for product

development. Customers work with Panova to source custom

and standard rubber, plastic and metal components.

Our established supply chain, expertise in materials and

manufacturability, and responsiveness make it easy for

you to realize the cost benefits of outsourced production,

while still getting the product quality and availability you

need to run your business.

For more information on how your organization can engineer

value thru contract manufacturing, please visit www.panova.com

or contact us at (800) 951-0071.

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