When product demand begins to rise, coatings manufacturers are faced with a dilemma: either increase in-house capacity and resources to meet demand or outsource production to a contract manufacturer. The contract manufacturing option is often the fastest strategy to efficiently meet business demands — if you find the right partner. Before you enter into a contract manufacturing agreement, be sure to ask yourself and your potential partner these important questions.
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1. Is Outsourcing the Right Business Strategy?
As time management guru Alan Lakein said, “Failing to plan is planning to fail,” so it is important to be clear about how outsourcing will meet your short- and long-term goals. Have an honest discussion with your manufacturing partner about your vision. This includes current demand, long-term volume projections and new business growth opportunities.
Be as transparent as possible. Contract manufacturing arrangements work best when both parties are trusted partners and the contractor is an integral part of your business operations instead of an "order taker." Once you have a true partnership, the contractor will be in a better position to be supportive, flexible and empathetic through challenges or growing pains. Synergy between you and your contractor will allow both parties to adapt to changes ranging from economic and supply chain disruptions to shifting consumer demands and technology advancements.
2. How Will You Meet Your Profit Goals?
Look beyond the line item price of the coating product and focus instead on the total value of the arrangement. Outsourcing can reduce your total costs — as well as your risk — by decreasing your direct costs for labor, raw material procurement, overhead, waste management, inventory, quality control, and capex items such as equipment and production facilities.
Be honest about your profit goals and expect the contract manufacturer to do the same. Remember that lower-priced raw materials and manufacturing processes may be of lower quality and may not meet QC and customer specifications.
3. Do You Need Research and Development Assistance or Strictly Toll Producing for an Existing Formulation? Is the Answer the Same for Your Short- and Long-Term Growth Strategies?
Contract manufacturers that offer R&D in addition to manufacturing services provide significant value, especially if your product formulation needs additional properties or tweaks, or if your mature product needs new and different properties to inspire increased sales. Consider the case of one of our long-term partnerships in which we contract-manufacture a clear top finish for flexible vinyl used for tents and architectural structures. After several years, our customer began to receive complaints of mold growth on their product in certain environments. As a contract manufacturer with deep chemistry and engineering expertise, we were able to incorporate a unique anti-microbial additive and modify the original formula to solve this performance issue while staying within the price target. This is a great example of a true partnership and adapting to challenges to succeed together.
4. What Does the Non-Disclosure Agreement Cover?
Not all NDAs are created equal and they can be difficult to understand. The best NDAs are “two-way” NDAs that fully protect both companies. Either the coatings marketer or the contract manufacturer can produce the NDA in a way that establishes a mutually beneficial relationship for the long haul. According to Mark. A Watkins, Esq., Partner with Vorys, Sater, Seymour and Pease LLP in Akron, Ohio, the NDA should define its purpose or subject matter as well as define how confidential information is exchanged (either unilaterally from the disclosing party to the receiving party or mutually between both parties) and whether that exchange is written, verbal or visual. Be clear in the NDA about who will own any new inventions that might result from the exchange of confidential information as well as any non-compete requirements. NDAs must be signed by authorized company representatives for them to be legally binding.
5. Who Will be Sourcing, Buying, and Inventorying the Raw Materials and Packaging?
The answer to this question plays a major role in the profit target discussed earlier. Are you looking for a complete turn-key operation from your contract manufacturer or would you like to handle some or all the ingredient sourcing, ordering and inventory management yourself? Before outsourcing this function to your contract manufacturer, see what type of buying options they are comfortable with. Also, check to make sure they have a dedicated team and assigned sales representative who will make sure materials arrive on time for batch production.
6. What is the Contract Manufacturer's Standard Lead Time and How Often are Orders Ready on Time?
Lead time commitments are imperative to running a successful business operation. Unfortunately, this question is sometimes overlooked until it is too late. Your contract manufacturer should be able to commit to a standard lead time and continually track on-time and late orders. If an order is late, they should track the reason so they can identify and fix any reoccurring issues. Strive for a minimum on-time delivery rate of 90 percent.
7. What Can I Expect in the Way of Communication from the Contract Manufacturer?
There are many circumstances in which consistent and clear communication is critical. Don’t forget to ask how often you will be communicated with about your order status, production and shipping timelines, payment due dates and other terms. Know who to contact with questions. Ideally, the contract manufacturer will provide direct communications access to multiple staff members including a technical sales representative, customer service representative and chemist so you can get your questions answered as quickly as possible.
8. What Are Your Requirements for Quality Control and How Will a Prospective Contract Manufacturer Fulfill This?
Most coating formulations require a standard range of QC specifications such as gloss, viscosity, color, particle size, etc. Does your formulation require a unique criterion that needs to be measured in every batch? You should clearly outline all required testing and quality checks for each formulation. Determine the formal quality standards, such as ISO , and the industry-specific standards to which the contract manufacturer complies and ask if they will conduct additional testing as needed. Look for a partner that customizes their approach for each customer and that tests and records all standard and additional specifications required. They should also retain samples of each production batch in inventory for future reference if needed.
9. What Are Your Shipping Options?
It is essential to learn what your options are for shipping your products efficiently, at the right time, and at the lowest cost. Identify domestic and international product delivery destinations and how shipping will be invoiced. If the product's formulation contains hazardous materials, the contract manufacturer's regulatory team will need early access to its Safety Data Sheet to ensure seamless shipping and compliance. Make special note if your products will be shipped to one warehouse or drop shipped to multiple locations. Look for a contract manufacturer whose regulatory and shipping departments can help ensure products arrive efficiently and as quickly as needed.
10. What Happens to Production in the Event of a Natural Disaster or a Government Shutdown?
Fires, natural disasters or other unexpected events can be disruptive to fulfilling production. When making the decision to outsource your manufacturing needs, reliability is key. A secure plan to follow when the unfortunate happens is critical to long-term success. Is your contract manufacturer considered an essential business that is able to service a variety of key industries in the country and globally? Does it have redundant manufacturing facilities to sustain production in the event of a disaster? The recent COVID-19 pandemic and its impact on business continuity should provide a lesson to learn.
With competitive price and timely delivery, Kuasu sincerely hope to be your supplier and partner.
Turning to a contract manufacturer can help your business reap multiple advantages, both in the short- or long term. Doing your homework up-front will help to ensure a successful partnership moving forward.
Purchasing injection-molded components is a major undertaking. And choosing an injection molding supplier can be nerve-racking. Suppliers have different processes, protocols, and communication styles.
What are you looking for in a plastic injection molding partner? What are your expectations for quality, timing of delivery, technology, production capabilities, financial health, and a continuation plan?
All of these are considerations when looking to deliver a project on time and within your budget.
Some partners, such as Crescent Industries, have evolved the capacity to offer post-processing operations to help manage the complete supply chain. This full-service approach can provide design, mold build, molding, secondary operations, and inventory management to help ensure on-time and on-budget delivery.
Choosing a supplier is not simply a matter of choosing the lowest number from a series of estimates. It’s important to dig down into the core competencies of the potential partner and understand if they can handle a project from cradle to grave and beyond.
One of the biggest issues in the injection molding industry — for molders and customers alike — is evaluating the total cost of ownership throughout the lifetime of a project. That means understanding the difference between being price conscious and cost conscious.
It’s important to understand your needs and to plan for the future. For example, one OEM chose a supplier for an initial prototyping and short-run production. But once the production demand increased, the supplier could not support the required high-volume production due to capacity and resource restraints. They had to move the tools to a supplier who could handle these high-volume orders. On the other end of the spectrum, another customer incurred steep setup fees without understanding that they had chosen a supplier that only did high-volume production.
You are not just choosing a supplier; you are choosing a manufacturing partner.
In cases where budget and delivery problems occurred in a plastic injection molding project, it’s often true that these problems could have been prevented during the partner selection process. These problems include:
- Compromised quality
- Unpredictable lead and delivery times
- Gaps in capability
There are a number of qualities that plastic injection molding manufacturers can demonstrate to show that they are best qualified to avoid these problems.
Quality
Customers seeking a plastic injection molding partner can ask for a number of assurances about the quality of the work. Injection molding providers can prove their ability to meet quality standards by showing potential customers that they have:
- Adequate traceability from resin raw material to the finished product
- Quality certifications and protocols that are needed for your industry segment
- The ability to track scrap to achieve a quality KPI
- A robust molding process that is approved during the mold-building process
- An excellent quality inspection lab (team)
- Industry 4.0 technology that monitors the injection molding process on all machines live on the production floor
- Demonstrated success in the market
Timeliness
A qualified partner should have a process for communicating timelines that involves an initial agreement between customer and manufacturer about timelines and expectations. Procurement challenges do occur, but advance planning reduces these challenges. In plastics, procurement of raw materials (resins and compounds) can take 6 to 16 weeks or more, depending on disruptions in the supply chain like weather-related disasters and global events.
Injection molders also meet expectations of timeliness through transparency in their forecast of the entire process and through supply chain management practices. Some specific ways they achieve on-time delivery include:
- Providing mold design, fabrication, qualification, and production in-house: Providing these services in-house cuts down dramatically on the time that would be required to have the project transported and processed elsewhere.
- Using Kanban (just-in-time) shipping technology to track and maintain inventory levels.
- Using Focused Factory work cells: Studies have shown that the physical time of manufacturing the product is only 5-12% of the total lead time in a project. Using the Focus Factory strategy, manufacturers can optimally manage time, organizational structure, system dynamics, and time-based management principles in all parts of the organization.
- Using blanket purchase orders rather than waiting for a new P.O. in cases where purchases are recurring or when changes need to be made in dollar amounts, quantities, goods and services, and/or the maximum order.
Capability
Does the partner you are considering have the production capabilities for your project?
In short, your partner must have the equipment to perform the job, provide facilities that are modern and well maintained, and have a plant designed for efficient workflow with flexible manufacturing systems. They should perform process monitoring, scientific injection molding, and decoupled molding to ensure that the best manufacturing process is performed.
Your partner should have demonstrated success in designing and fabricating injection molds. They should be equipped with both horizontal and vertical molding presses, depending on your project needs. In addition, they should offer the highest level of standards for certification and decoupled molding processes.
Finally, the financial health of the company is an essential indicator of capability. A potential partner should be able to demonstrate proven success in overseeing operations, such as forecasting into the next quarter, and conducting inventory forecasts. A financially healthy partner not only has all of the equipment, processes, and personnel to complete your job, but has the capacity to acquire assets that will make your job run with optimal quality and efficiency.
Case Study: Finding the Right Injection Molding Partner Solves 3 Key Challenges
“We were looking to find a partner that could support our company’s entry into the biopharmaceutical market and also a partner that met all of the technical requirements for manufacturing molded parts for that market.” — Pharmaceutical Executive
Technical Challenges
A pharmaceutical company was seeking a partner to support entry into the biopharmaceutical market. They engaged a procurement specialist to research vendors. “We were looking to find a partner that met all of the technical requirements for manufacturing molded parts for that market,” an executive reports.
This company had the following criteria:
- Molded parts needed to be manufactured in an ISO Class & Clean Room.
- The supplier needed to be certified for manufacturing to the ISO Medical Devices Standard.
- The molding tools needed to be manufactured in the United States.
Design Challenges
The customer was seeking to stay with their total budget for three tools with multiple variations of the parts. This presented a significant budget hurdle, but Crescent Industries met the challenge by building injection molding tool sets with removable cavities that would utilize their Master Frame bases to house their tools during production runs.
Timing Challenges
The supplier needed to support a schedule to design and fabricate tooling and produce initial injection-molded parts with a quick turnaround. The solution to this problem was
Are you interested in learning more about Global Mould Manufacturing Partner? Contact us today to secure an expert consultation!
- Working with a partner that could design and fabricate in-house
- Working with a partner that manufactured tools in the United States to avoid long transportation line times and the risk of shipping delays.
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