Contract Manufacturing and the
3rdwave Solution
Contract Manufacturing (CM) or outsourcing is prevalent across
a broad range of industries. In an outsourcing arrangement,
it is the relationship itself that is the new strategic asset.
Contract Manufacturing relationships require the same attention
to solid management principles and practices as do traditional
in-house operations.
Continuous improvement, increasing value
and constant innovation are the outcomes of a well managed
process. Managed poorly, the services and overall relationships
deteriorate resulting in higher costs, operational disruption
and lost business opportunities.
A successful Contract Manufacturing relationship
between an OEM Contractor and the Manufacturing facility is
based on several critical factors - creating a long-term win-win
business environment, establishing clear expectations, defining
measurable objectives, and developing and maintaining open
communications.
With the above in place, the benefits
of using an OEM Contract Manufacturer are significant:
- Reduced cost of operations
- Reduced assets
- Financial leverage
- Organizational flexibility
The design of a contract manufacturing
network ranges from the very simple to the highly complex. The
simplest form of contract manufacturing is the placing of a
contract for a finished product manufactured to the specifications
of the brand owner. The complex contract manufacturing arrangement
exists where the brand owner also controls the purchase and
management of raw materials and packaging inventory and the
contract facility supplies the fixed assets and labor. This
latter environment is compounded when products move from one
state of work in process at one contract facility to another
contract facility for additional value added work - and not
necessarily in the same country. 3rdwave
CM has the ability to manage this process - from the most
simple to the most complex - to ensures the success of the
brand owner. 3rdwave helps optimize and profitably manage
this already complex environment - which has been made more
complicated since 9/11 and the focus of the U.S. government
on supply chain security.
For the brand owner who ultimately
will import the finished product, it is becoming more important
to insure that each contract facility and logistics' partner
in the supply chain network is secure. 3rdwave CM tracks the
origin of raw materials and ingredients that are used in the
finished product and candemonstrate that the entire process
is safe from a possible breach of terrorists.
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