What to Look For When Finalising A Third-party Manufacturing Company in India
A third-party manufacturer helps a company reduce workload, time, R&D and investment costs. However, a dilemma arises when the company begins to research for the perfect fit for their needs.
Essentially you should consider many factors before partnering with a third-party manufacturer. Also, there are some myths regarding choosing a contract manufacturer that we will clarify.
If you are wondering about the need for contract manufacturing, refer to this blog to get detailed insights. Or, if you’re wondering what to look for before finalising the contract manufacturing deal, read on.
Debugging the Misconceptions Around Third-Party Manufacturing
Before discussing things you should focus on while finding the right contract manufacturer, it’s crucial to get your head around the misconceptions surrounding this topic.
Like any other selection or shortlisting process, numerous myths cloud our judgment and perception. Following are the misconceptions that you should avoid at all costs.
1. Tier 1 contract manufacturer is the best
Partnering with a tier 1 contract manufacturer is not always the best choice. Tier 1 is merely a tag that financial markets use to classify companies based on their size. This in no way should be your primary criteria to select a partner.
It would help if you have a manufacturer that fits your company’s needs and product type even if it is not the so-called ‘tier-1.’ Along with that, you should evaluate them on their criteria: technology, corporate culture, philosophy, customer reviews, and business model.
2. Partnering with the company with the lowest price quote
A lower quote doesn’t mean the best. At times there are hidden charges which are revealed at a later stage of the production process. To avoid this, you should be clear on the terms and conditions before entering into the contract.
Moreover, a lower price quote can even serve as a question mark on a third-party manufacturer’s competency. Once you decide on a third-party manufacturing company, read this blog before getting into an agreement.
3. A third-party manufacturer is merely a supplier.
Never head into an agreement with the mindset of adding a third-party company as your supplier. It would help more instead if you lookout for a partner willing to add value to your business.
And that is the exact role of a third-party manufacturer. Thus, the company you seek should be an expert in their domain and capable enough to take over your workload, suggest changes and even guide you to improve your performance in whatever industry you operate.
4. It’s a bad idea to partner with my competitor’s CM
The prospect of a competitor utilising the same CM as yours could be off-putting, especially if you pride yourself on having a unique manufacturing process. But your ultimate output, on the other hand, is the culmination of numerous procedures. Even if you’re utilising the same CM, you can differentiate yourself and add value. So do not undervalue a CM just because they’re making for your competitor.
5. The product pitch says it all
No, it just doesn’t. Sometimes contract manufacturers tend to harbour excellent marketing and designing teams in-house. Result: product pitch that is every bit worthy of being carries away. But do not be blind to your decision at this point. No matter the product pitch, you would still like to do your homework before finally adopting the manufacturing contract. Even with a sparking product pitch, the CM could still have flaws in the manufacturing process.
Criteria for Selecting the Right Third-Party Manufacturing Partner
Just like the misconceptions, it is equally important to evaluate the following criteria for choosing an ideal third party manufacturer and finalising the agreement:
1. Listing the specialities of the prospects
Along with shortlisting the potential third-party partners, maintain a list of their capabilities as well. This will give you a clear snapshot of what they will be able to provide you. In the end, it will serve as an ultimate checklist for you to select the ideal partner for your business model. In addition, when you list down the specialities, you also get a clear picture of your need, which you may not know until you know their existence.
2. Equipment and assets of the company
A thorough survey of the third-party company’s technology and equipment will give you the necessary pointers of their efficacy. They should have the latest and efficient technological equipment to cater to your needs and deliver you market-ready, competitive products. Also, some companies will even source the required tools for your project if need be. Just make sure you have a clear picture.
3. Strength of personnel
It is the workforce that will accomplish your task. This makes it essential to evaluate the third-party company’s personnel and their ability to execute your planned strategy. In addition, the presence of skilled employees always reduces the time spent in hiring and training new ones.
4. Regulatory compliance
Make sure your potential partner is up to the mark with their quality and regulatory standards. A company adhering to regulations and norms set down by the country will always keep you shielded from manufacturing delays. Thus, it is better to be vigilant about the third party’s compliance standards.
5. The degree of scalability
Consumer demands are the most variable factor and decide the inventory requirements. This, in turn, requires your third-party company to be agile to incorporate those varying demands. Thus, go with a company that is capable enough to help you meet the variable market demand.
6. Location
This isn’t as trivial as it may sound. The final assembly location of your product should ideally be in your vicinity to reduce logistics costs. However, this factor can’t be the end all be all for choosing a partner but is better to determine that whether their location suits you or not.
7. Domain expertise
Expertise doesn’t always correspond to the number of years your potential partner has been in the market. Instead, it is the breadth of their offerings and successful implementations which determines their expertise. Hence, mapping those accomplishments with your goals should align to make an ideal match.
Oakter – Your potential partner
If you are looking for a trusted third-party manufacturer for your business Oakter can help. They have expertise in IoT Manufacturing and have deployed their products for reputed companies like Google, Sony, and Indian Oil among others. You can explore their range of products using this link.
Oakter proficiently handles all the stages of the production process, be it mapping requirements, prototyping, and deployment. With Oakter, you can rest easy as they act as a 360-degree partner for you and take over the production load leaving you with precious time to focus on other business activities. For particulars of Oakter’s services, you can refer to this blog.
In conclusion, you can rest your inhibitions, keep in mind the above criteria and ignore the myths while choosing the proper third-party manufacturer.
However, if Oakter’s product offering aligns with your company vision, then do feel free to visit the Oakter website and get in touch.