What Is Contract Manufacturing? Benefits And Tips For Outsourcing

Here at Creative Design Manufacturing, we specialize in designing, creating, and producing high-quality handmade fiberglass planters for well-known global brands. Our top-of-the-line fiberglass planters are an artful mix of sophistication and durability that is guaranteed to exceed customer expectations.

We have been in the contract manufacturing business for a long time and are amongst the top firms in the planter manufacturing industry worldwide.

Over the years, Creative Design Manufacturing has produced quality products in our factories in Vietnam and delivered top-end fiberglass planters to wholesale distributors, retailers, real estate developers, landscape architects, education institutions, and even airports around the world.

If you are reading this article, you are wondering if you should outsource manufacturing or you have decided and are looking for the right contract manufacturer to fulfill your dreams.

Look no further – this guide will cover the different types of contract manufacturing, contract manufacturing services, and the many benefits of partnering with companies such as Creative Design Manufacturing.

What is Contract Manufacturing?

First, let’s tackle this big question. Not every individual or company looking to start or grow their business is able to have the time, money, or resources to conduct the entire manufacturing process for their own products in-house.

This is particularly true for many industries that require advanced skills or investment in manufacturing equipment.

For most companies that find themselves in such a situation, the contract manufacturing business model is an answer to their supply chain issues.

Companies needing manufacturing solutions would then sign a contract of manufacturing with another firm to produce their products. The contract will specify a period of time to manufacture certain items be it components or products.

This is regarded as a form of outsourcing. Often the hiring firm will conduct the contract manufacturing in manufacturing facilities in low-cost countries where raw materials are more readily available, labor costs are lower, but where expertise and capabilities meet quality standards.

If it goes well, the hiring company receives a steady flow of goods at reduced costs, thereby satisfying the needs of their own customers.

Types of Contract Manufacturing

There are many types of contract manufacturing companies and different services they offer. Here, we will cover the 4 main forms of contract manufacturing examples.

1. Private Label Manufacturing

Private label manufacturing or white label manufacturing is when the contract manufacturing companies produce a finished product for the client, and the client places their own branding on it.

This is also called Original Design Manufacturing; the customers only need to find a company to produce the products they want, there is no need to design a product themselves.

In this instance, the contract manufacturing companies are allowed to produce those items for other customers too.

This is the best choice for businesses that want to manufacture products with minimal effort or with little to no research and development budget.

2. Original Equipment Manufacturing

The usual definition of an original equipment manufacturer (OEM) is a manufacturing company that produces the final product or component products based on the specifications provided by its clients in the contract manufacturing agreement.

The product is specially made for this client and no other firms can have access to it.

For example:

• Apple is a technology company that invented and designed the iPhone.
• Foxconn factory is Apple’s supplier that produces their smartphone (using the OEM model).

Therefore, the design is exclusive to Apple and the production is carefully managed by their contracted manufacturers.

Learn the difference between Original Equipment Manufacturing and Original Design Manufacturing.

3. Component Manufacturing

Component manufacturing is often useful when the client lacks certain core competencies in their own in-house manufacturing. Simply put, the client is unable or unwilling to produce some parts of their product and looks for a contract manufacturer that has the capabilities to do so.

For this type of contract manufacturing, the contract manufacturers are a part of your production supply chain, once the specific parts are manufactured by them, it is up to you to assemble the final product.

It might be a good idea for you to engage in component outsourcing as it can result in cost savings, a simplified production process, and even higher quality products if your firm lacks the expertise, raw materials, or even interest to do that part of the manufacturing work.

4. Sub-contract Manufacturing

Sub-contract manufacturing is similar to component manufacturing; in this case, the manufacturer handles one aspect of the production process on a contract basis, rather than the client having to include that particular part in their production line.

For example:

• A building contractor may hire an architectural sheet metal specialist for a building project client
• The building contractor is still responsible for the quality of the outsourced sheet metal work

3 Benefits To Using Contract Manufacturing Services

Now that we have covered the main forms of contract manufacturing, you may wonder what the advantages are of using a contract manufacturing company? Here are 3 great reasons why you should outsource contract manufacturing work.

1) Cost Savings

In general, using a contract manufacturer is a cost-effective decision for the hiring company. First, contract manufacturing businesses such as ourselves have economies of scale, the production facility is tailored to produce that particular item, and we already have the proper equipment and access to bulk raw materials.

Often the countries that the contract manufacturers are based in have access to a large and lower-cost labor force. All this means cost savings are passed on to you and your customers.

Second, you as the hiring company need not purchase your own equipment nor dedicate staff to be trained on how to use it, maintain or repair it.

Once the hiring company signs the agreement, it is up to the contract manufacturers to be financially responsible for staff and equipment, you are only liable for paying the contract price.

2) Better Manufacturing Speed

Contract manufacturers are often specialists in producing those specific parts and products. They have the experience and know-how. Such production services cut down your own manufacturing time.

Using a contract manufacturing facility increases the speed at which your products reach the market, thus improving shipping time and service to customers. Though you do need to take MOQs into account.

Learn more: What are MOQs? And how can they work for me?

3) Lower Barriers To Market Entry

Contract manufacturing services easily lower barriers to market entry. This is particularly true if you have a limited research and development budget, or if you need your product to hit the market as soon as possible.

Contract manufacturers will be able to create products that meet high-quality standards, giving you an edge in the market.

Having quality products without needing to dedicate time and resources to it also means you can redirect your budget, for example to honing your marketing strategies.

3 Concerns About Using A Contract Manufacturing Company

Of course, there are also risks attached to using a contract company to produce your goods. Be sure to pick the right contract manufacturer that can mitigate these concerns.

1. Lack of Control

When you rely on outsourcing, it puts you in a position where it is difficult to have direct control over the production process. This lack of control can result in many different types of oversights.

For example, quality control may not be as standardized or as stringently practiced as you wish. This can mean low-quality products for your business.

Your lack of oversight of the manufacturing process might also mean you are unaware of the health, moral, and ethical standards that the manufacturing companies might have.

The solution: make sure to vet your manufacturer either in person or with an intermediary. Get to know your manufacturing company – start with the About Us page!

If you’re looking to outsource to Vietnam, but do not need our planters, there are a number of organizations offering consultations on contract manufacturing such as sourcing-in-vietnam.com and cosmosourcing.com.

2. Cultural Differences and Language Barriers

As would likely be the case, your contract manufacturing company might be in a country that does not use English as their first or working language.

This would mean more time and resources dedicated to overcoming the language barrier to reduce miscommunication and misalignment in the manufacturing process. Supply chain management could be a hassle depending on the size of your firm.

Cultural differences would also come into play. For example, in high context cultures such as Brazil, China, India, and Vietnam, a lot of emphases is placed on ‘saving face’ and building personal relationships.

In such countries, inviting a business client to one’s home is not uncommon. However, this can be perceived as too informal and even intrusive for business people from other cultures, so be ready to embrace new ways of doing business!

3. Intellectual Property Loss

Industrial espionage or leaking of IP information becomes a matter of concern when engaging in contract manufacturing.

Legal protections are paramount, as is the security of the contract manufacturing company. If possible, the hiring party should not divulge core competencies to the contract manufacturer even after a good relationship has been formed.

Looking for some industry and battle-tested advice for sourcing in Vietnam? Meet our production manager!

Why Is Vietnam A Powerhouse For Contract Manufacturing?

Vietnam has emerged as a leader in contract manufacturing amidst tough global competition due to its exception cost competitiveness and outstanding high quality of production.

Labour Force: Vietnamese workers have a high literacy rate are well-skilled and have high workmanship standards. Hourly labor rates in Vietnam are significantly lower than in neighboring countries

IP Regulations: The Vietnamese government has put into place laws and regulations to safeguard the intellectual property of foreign investors and companies. As a member of the WTO, Vietnam respects its IP requirements, which protect industrial property and other rights.

Raw Materials: Vietnam has many resources within its borders, such as solar and wind energy, coal, oil and gas, and wood for furnishings.

A Strong China Alternative: Vietnam’s geolocation has its advantages. Many foreign companies are considering shifting their contract manufacturing from China to Vietnam in a post-COVID 19 world.

Read on to find out more about why Vietnam manufacturing is the top choice for contract manufacturing globally.

Every contract manufacturing company is different and often the success of your endevours boils down to the specific company that you are working with as your manufacturer and the relationship you can foster with them.

Luckily, for Vietnam Creative Design Manufacturing, having a good relationship with our customers is king and that’s one reason why they are so successful. We literally do everything we can to ensure the success of every contract!

Why Choose Creative Design Manufacturing?

For any hiring firm looking to outsource, the bottom line is the quality of the finished product.

Creative Design Manufacturing has a proven track record – we produce top-of-the-line fiberglass planters for the global market and are behind many well-known global brands.

Our luxurious collection of planters is carefully handcrafted from commercial-grade fiberglass with maximum strength plant-based resin. Our planters are UV-resistant, frost-proof, insanely durable, and also customizable to your design needs and specifications.

Top tip: Find out what fiberglass is and why we stand by it as the superior material for top quality and stylish planters.

Our ODM And OEM Services

ODM Services

As an original equipment manufacturer, we are here to help you build your brand. We have an extensive and beautiful collection of white-label landscaping products, with a focus on planters, planter boxes, flower pots, and other landscaping containers.

This is the perfect contract manufacturing solution for you if you are a retailer looking to start or grow your own brand and you wish to not invest the time and resources in producing your own designs or to attain the equipment to do so.

We offer white labeling on more than 100 standard planter shapes and sizes available in both indoor and outdoor product categories. We are also able to produce a one-off design for you.

In most cases, we find that our international partners prefer to build a portfolio from our available range of high quality products.

Learn more about our ODM service and how to get started.

OEM Services

This is our full 360-degree service. Bespoke solutions are created exclusively for you. This could involve manufacturing brand-new designs and custom sizes.

Reach out to us for your bespoke needs, our team of experts will work with you every single step of the way to ensure that we deliver exactly what you need.

Learn more about our OEM service and how to get started.

Creative Design Manufacturing is Your Contract Manufacturing Partner of Choice

You can count on us. Creative Design Manufacturing does not outsource any portion of the production process. With several fully-contained factories in Vietnam dedicated to servicing your needs, rest assured that we will bring your ideas to reality.

We are committed to providing innovative contract manufacturing and supply chain management solutions to a global customer base. To further underscore our commitment to long-term value and partnership, all our flower pot products are protected by a 3-year guarantee.

Expect nothing but the finest handmade planters with the best materials available on the marketplace today. Contact us today and let’s create something special!