East West Manufacturing Blog

10 Things Your Competitors Can Teach You About Contract Manufacturing

Written by Mary-Kerstin Hassiotis | July 19, 2016

Rather than chalking your competition up as your arch nemesis (or, even worse, to "He-Who-Must-Not-Be-Named" status), you can actually learn some useful lessons from them, courtesy of their successes, failures and habits alike. Whether you learn what to do better – or what to avoid at all costs  taking interest in what your competitors are doing can have major benefits for you, especially when it comes to contract manufacturing. 

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The Ten :

1 |  Low cost isn't everything
2 |  Inflexible suppliers will be dropped 
3 |  Product quality > meeting deadlines
4 |  Partnerships are your best bet 
5 |  Supply chain know-how sets you apart 
6 |  The customer is always right, except when they aren't
7 |  Right-shoring trumps "made in..." preferences
8 |  Product quality suffers without DFM
9 |  Documentation is king
10 |  Contract manufacturing is a multi-pronged investment

1 |  Low cost isn't everything

If it were, customers would choose the lowest cost option every. single. time. And that simply isn't the case. Sure, cost is a major player in decision-making, but it's one of several factors contributing to the final call. Buyers are willing to shell out more money for higher quality.

2 |  Inflexible suppliers will be dropped 

Great quality, on-time delivery...what more could a customer ask of their supplier? Flexibility, that's what. Stellar performance aside, if a manufacturer cannot offer the flexibility their customer needs, the relationship will fizzle faster than a Kim Kardashian marriage (i.e., pretty dang fast). True partners can be distinguished from one-and-done vendors based on their levels of commitment and flexibility. 

3 |  Product quality > meeting deadlines

This is not to say that maintaining a schedule and delivering on-time aren't important – they certainly are – but when it comes to pitting quality and timeliness against one another, quality will always win. Just ask our product development engineers; they'll tell you that getting the design right trumps getting the design right away.

  Related: 3 Things Product Development Engineers Want More Than "Fast"  

4 |  Partnerships are your best bet

The old-school supplier/buyer, purely transactional relationship is dead. Actually, it's not dead whatsoever. But it's definitely not the way to go when it comes to contract manufacturing. Using the term "transparency" is essentially the literal version of beating a dead horse, but building an open, mutually beneficial relationship is the single best way to set yourself up for long-term success.

  Free Download: 5 Qualities to Look for in the Perfect Partner  

5 |  Supply chain know-how sets you apart

A manufacturer who knows all about global logistics and inventory management? Yes, please. This is the new wave of contract manufacturers, and without this focus and expertise, you'll be left in the dust while potential customers seek out your highly specialized, multi-talented counterparts instead.

6 |  The customer is always right, except when they aren't

This isn't the same as saying "the customer is wrong" – not by a long shot. What I mean is that one of the pivotal reasons companies, entrepreneurs, etc. partner with a contract manufacturer is to take advantage of their expertise. While the client may think their design is perfect (and it may very well be close to perfect and aesthetically stunning), a product development engineer is concerned with its manufacturability rather than its beauty.

This attention to design detail can be the difference between an average and a remarkable product. Finding the right balance between inaction (resulting in a lackluster product) and harsh critique (potentially damaging the relationship) is the key to a mutually beneficial partnership.

7 |  Right-shoring trumps "made in..." preferences

At the end of the day (and this may be difficult for some to read), buyers want something extremely simple: high-quality, low-cost goods. That is their mission. While some buyers feel strongly about the "Made in America" push or other "made in...." preferences, data supports that cost and quality typically win over these sentiments.

 Poll: Americans prefer low prices to items 'Made in the USA'  

8 |  Product quality suffers without DFM

Let's revisit the notion that the customer isn't always the best voice of reason: a product design can be exceptional, but if it isn't designed for manufacturability, it will simply be a concept, not a usable product. This is where a contract manufacturer's design for manufacturability (DFM) team steps in to save the day – to assess the design for its degree of manufacturability and tweak it where needed. This level of attention and experience is something you're less likely to find if you simply choose a low-cost supplier on Alibaba.

  Related: What is Design for Manufacturability, or DFM?  

9 |  Documentation is king

Any successful manufacturer does not operate in a vacuum they have policies, procedures and best practices for every task. They also document day-to-day happenings like it's going out of style to manage data and analyze it to identify trends. Not only does this keep your operation running smoothly, but some customers will expect to see a high level of detail and organization if you'll be making their product. They want to know that you have your ducks in a pretty little row, and if you aren't able to prove this, their trust could wane. 

10 |  Contract manufacturing is a multi-pronged investment

Sure, there are the obvious, tangible investments like facilities, machinery and labor, but contract manufacturing involves other, less noticeable investments as well. Building meaningful relationships with customers involves some degree of give and take on both sides, and as the manufacturer, this could mean investing in tooling, software or additional personnel to bring a project to fruition. Rather than seeing this as wasted cost (which it absolutely is not), consider it a wise investment in the future of your partnership.

The Takeaway

The next time you're ready to write off your competitors and play a long-running game of the silent treatment, stop yourself. Ask what you could learn from the competition, whether it's good, bad or otherwise. While you don't have to wine and dine them, a peek into their habits can bring great enlightenment to your own business.

Suggested Reading:
 3 Tips for Painless Supplier Agreements
Addressing Product Quality Issues with Your Supplier [Free Checklist]
How to Change Suppliers the Right Way
2 Best Ways Engineers Find the Right Contract Manufacturer
6 Biggest Mistakes When Selecting a Contract Manufacturer: Part One
6 Biggest Mistakes When Selecting a Contract Manufacturer: Part Two


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