Local contract manufacturing

Contract manufacturing generally tends to reduce costs. Of course, the type of industry and the nature of work may decide contract manufacturing. It is a strategic imperative to compete effectively vis-à-vis competitors, by subcontracting the products to the local manufacturers. Benefits arising out of such a strategic move are:-

• Major costs elimination in the operations.
• Labour issues are handled by the local partner.
• Along with freeing up of existing facility, it allows to focus on our own (our organization’s) core competencies, freeing up other resources, improved efficiency, speed and flexibility, and therefore it facilitate a quicker market penetration, position, as well as expansion.
• Contract manufacturing turns out to be a good choice in the case of:-
  • When the volumes are less.
  • The Change over time affects the production of other variants.
  • Predominantly for Local supplies.
  • Urgently required small quantities.
  • Located nearer to the parent company (lead time control)

Pre requisites for a successful contract manufacturing:-

Some common concerns:-

• Stealing of the Technical know-how
• Questions over the quality of the products manufactured due to inferior raw materials used.
• Unavailability of the above mentioned pre-requisites.
• IPR infringements
• Other problems including:
  • Lost customer
  • Eroded goodwill
  • Insecurity of the regular employees
  • Cost cutting at every opportunity
  • Corroded Employee Morale
  • Declining innovation