Project management to contract manufacturing

Project management is one of the most important factors to succeed a contract manufacturing business. A good project management of contract manufacturing is the key to ensure consistent supply chain. When you choose a contract manufacturing service, you must get your project managed good enough to hit your goal. Here below we would like to share five important skills on how to achieve it.

 Intellectual Property management

IP protection is the first step before you are working with a contract manufacturer, you must get your product trademarks, patent, and copyright registered locally and globally where you would like to manufacture and sell. 

Generally speaking, European countries and US countries has already built very comprehensive intellectual property rights laws and regulations to protect each IP run safety. In case anymore who break the law, they will be heavily punished. However, the intellectual property protection is not as well-performed as European and US countries do. Even China had entered the World Intellectual Property Organization in 1980, but the government has not strictly managed this aspect in order to develop economy and technology. This is why how many oversea buyers complained they had encountered a product to be copied or stolen while contract manufacturing in China. But this case gradually become less and less, as Chinese government has noted the importance of intellectual property to promote progress in science and technology, and has developed many local law to protect intellectual property for everyone.

When you are trying to move your project to China for manufacturing selling, you are highly recommended to registered a China local trademark, patent, and copyright. In this way, your products will be protected by China law. In case anyone attempted to steal your products, you can use a Chinese law to protect yourself.

Manufacturer Choosing and management

As long as you are planning to manufacture your products by an outsourcing manufacturing model(we call it contract manufacturing or OEM manufacturing business model), you need to find right manufacturer as your partner. However it’s really not easy to obtain it at all.

There are many ways that you can find some contract manufacturers near your location or in Asia Countries(China, India, Vietnam, Cambodia, Malaysia, etc) You may get it by referrer, B2B platform(Alibaba, Global Resource, Made-in-China), tradeshow, or Google search.  Among of them, there are lots of brokers, traders, and small manufacturers that they might not provide quality manufacturing services as you expected.

Therefore the first thing you need to do is to identify what kind of manufacturer you are working for. Broker or real factory? As it will directly determines your product quality, service level, lead-time, as well as cost. The direct way to observe it is to visit their facility in person or send the third-party of partner to do it. While manufacturing evaluation process, you should score it based on factory scale, number of employees, equipment and machine, company history, reference customer, and so on. And finally sort out the most valuable one to cooperate.

To keep your supply chain or single contract manufacturing business consistently, you need to manage your manufacturer well. In a simple word, you need to let your manufacturer happy to work with you while not compromising your task. One of the key important thing is to keep your contract manufacturer reasonably-profitable with respect. This is very important to make them happy to work with you. Of course, you should prevent yourself from being cheated on cost and quality. So you should keep eyes on these two points frequently.

Lead-time

Lead-time reflects if a manufacturer has enough capability to produce your product or if they professionally focus on your business. If you chosen a local manufacturer, you can quickly access their facility to follow up your project progress, but if you choose a contract manufacturer abroad, it’s not so convenient to see how your product made visually. In this case, you need to sign a manufacturing contract before releasing your order. You must set up a certain percentage of constraint fund for breach of contract. Normally there should be 1%~3% per day of compensation if the lead-time of your order is delayed. In this way, the manufacturer will concentrate their energy and resource to meet your lead-time requirement. Meanwhile, a pre-check process is also important to achieve your lead-time goal. To be exactly, you should check out your order status 2 days in advance of the lead-time. In case there is anything unexpected, you can take emergency measure to adjust your shipment plan.

Quality

Needless to say, quality is the most important factor to any business. Before you working a contract manufacturer, you should have a basic quality sense on their quality control capability, equipment level, and quality system. Even through, you might find tons of manufacturers who claims they are ISO qualified company, but they do not delivery what you look like. Generally a high quality manufacturer should include the following quality points:

-Full understand of customer’s quality standard.

-Experienced QC inspectors, engineers, and manager.

-Measurable quality standard and quality plan are really performed in the routine work.

-Enough quality inspection equipment with regular calibration measure

-All manufacturing equipment and machines are in good condition

-All operators are fully trained before on work.

But you might wonder how you should contract our product quality if you choose an oversea contract manufacturing service? Yes, it’s a good question.

Before you place an order, you should include your quality requirement in the manufacturing contract. And share your detail design drawing, product specification, and test standard with your manufacturer at beginning of a project. Be sure they are fully aware of what you needed exactly.

When shipment, you can either send a third-party of inspection company or have someone to inspect product quality before shipment. And make record for each goods inspection. Give a score evaluation for each shipment. If the manufacturer always perform good acceptance rate, you can give them a green light. If not, you might highlight it as yellow or red level, which means you need to work them to improve quality control. Or cancel to work some really bad manufacturer if needed.

Cost

Cost is very sensitive top at the project quotation stage. It effects your budget and product quality. When you start a quote procedure, you can find 3~5 target contract manufacturers who might have different factory scale, manufacturing level, and experience. You will get definitely different offers from them. It could be 10~50% price different for different level and different region of contract manufacturer. Normally a small scale of manufacturer will provide much lower price than a big one. For example, if you take a price comparison between Foxcomnn and a 50-people of factory, the offer from Foxcomnn will be 50%~100% more expensive. A contract manufacturer in USA or Europe will definitely offers much high cost than manufacturers in China(there should be 30%~50% price difference).

So you should clearly have those cost knowledge mentioned above. And use the cost difference to request cost reduction from your final manufacturer.

On the opposite, few of Asia manufacturers use low price strategy to attract customers at quotation stage, but they will make some hiding cost that they would not claim, then add cost after your paid for deposit of initiation payment.

Here below are some useful tips to get your project cost managed properly:

  • Getting quotation from variety kind of manufacturers
  • Require cost breakdown for quotation sheet.
  • Cost calculation for raw material, labor cost, facility running cost, and other manufacturing expense.
  • Cost-down program for some large manufacturing volume project

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