Many companies struggle to find the right-size contract manufacturer. It’s important to learn as much as you can before selecting a partner to work with. This puts you in the best position to make an informed, educated decision.
Strive to Be At Least 10% of the CM’s Revenue
Although you might need to spend less than ten percent at first, you’ll want to strive to become at least 10 percent of the CM’s revenue within a year. Maintaining a steady revenue for the CM ensures a mutually beneficial relationship for both yourself and the contract manufacturer. It’s important to note that this rule applies to the actual plant that produces your products.
Stay at or Below 50% of the CM’s Revenue
Although you’ll want to ensure a consistent revenue stream for the CM, it’s important to avoid a potentially unstable situation. If your CM relies on you to sustain their business, you could find yourself in trouble if your business takes a downturn. You never want to be more than 50% of your CM’s total revenue.
Ask to Speak With the Plant Manager
Most contract manufacturers will not disclose financial information. This can make it difficult to determine plant revenue. When choosing a partner, ask to speak with the plant manager. If your potential spend is well below ten percent, they likely won’t take the time to meet with you. This is also an excellent way to gauge your relationship with your CM.
Be Honest
While you want to make sure the contract manufacturer you choose wants to work with you, it’s important not to lie or mislead. Don’t imply that you plan to spend more than you actually have available to spend. This will only cause problems.
Final Thoughts
Searching for the right-size contract manufacturer for your needs isn’t about getting the best price. It’s about ensuring the CM values your relationship. This can go a long way towards your success. Look for a contract manufacturer that takes the time to listen and understand their clients.
Means Engineering offers a variety of contract manufacturing services. We work with each of our clients to evaluate their needs and develop a customized solution. Please contact us for more information about our services.
