Posted on / by Jesus David Cano Romano / in

Contract Manufacturing vs Global Manufacturing in China

The world of Manufacturing has changed rapidly during the last couple of decades, just 20 or 30 years ago countries like China were still rural in its majority, nowadays South East Asia countries and China in specific have become the Manufacturing Hub of the world. And not only the locations for manufacturing had changed but also the ways to Manufacture.

Contract Manufacturing

Twenty years ago the term Contact Manufacturer grew up and started to really grow overseas,Global Manufacturing scaled quickly, many examples are there mainly naming global brands whose switched their manufacturing chains.

The term ‘Job Shop’ brings an image of a small volume, high mix, typically domestic and often lower value fabrication operation. The owners compete with other similar organizations in a continuous ask – bid – quote cycle to larger OEM’s who are typically looking for just the lowest price.  It is hard to build a business or add value to a customer who sees what you do almost as a commodity.

Contract Manufacturing used to be defined as simply one factory making a product for another. Produce it, ship it, that’s it.  That model worked for a long time but now the process has shifted to get contract manufacturers to become valued suppliers.  The term ‘outsourcing’ is often times used as a synonym to contract manufacturing, which is not always accurate. For some it has become a negative connotation regardless.

Contract manufacturing is a process that establishes a working agreement between two companies. As part of the agreement, one company custom produces parts or other materials on behalf of their client. In most cases, the manufacturer also handles the ordering and shipment processes for the client. As a result, the client does not have to maintain manufacturing facilities, purchase raw materials, or hire labor in order to produce the finished goods.

The previous called ‘local contract manufacturer’ are producing complex critical-to-function components, electronics, sub-assemblies, and finished goods around the globe.  Managing a supply chain from 12,000 miles away takes a lot more ingenuity than one across the street.  Long lead Items, Vendor Managed Inventory, Logistics, Warehousing, Leveraging Port Specific Tax Credits, Cross-Docking, and Blanket Release Purchase Orders are just a few of the differences between a local contract manufacturer and a true global manufacturing supply partner.
Thus, the emergence of Global Contract Manufacturing – or simply Global Manufacturing.

Global Manufacturing

A Global Manufacturer is a company that manufactures components, sub-assemblies, assemblies, and finished products for another company by leveraging raw material, manufacturing capabilities, cost, and an efficient supply chain that spans across the world.

We like to understand Global Manufacturing as manufacturing in cost effective locations at high Quality Standards.  Using Our Corporate Slogan, “Western Service, China Price”

The general concept of Global Manufacturing encompassed more than just manufacturing and delivering goods, these days manufacturers need to offer value added services to the process, clients now demand more than just goods.

Global Manufacturing this days is synonym of ODM (Original Design Manufacture), as the manufacturer will provide services from the design stage until the distribution one; Global Manufacturing would normally include:

Consultancy and Support services

Prior the start of the production the Global Manufacturer will be serving to the client as a consultant in order to solve issues related to the development or envision of the new product.

Design Services

From CAD, to 3D design, rendering and prototyping a Global Manufacturer will offer design services to bring to life the clients idea.

DFM (Design for Manufacture)

A really popular term these days as the service provider will make sure that the approved design is manufacturable and can be done at the lowest price (something primordial when mass manufacturing).

Manufacturing

The main part of the Global Manufacturing, as it name refers, the main part of the process, “the manufacture” of the goods

Quality Control

Although manufacturing specially in China has surprisingly evolved during the last years, pitfalls may occur if not established an adequate Quality Control regime,

Supply Chain Management

Globalisation has made the distances shorter and the local market now is the world, before the manufacturer would normally be shipping the lot to a single destination in a single geographical point, nowadays the supply chains require multiple destinations at different time zones and delivery schedules, a Global Manufacturer must be able to put the goods in the right place, at the right time on the right quantities.

Last but not least, finding some one who can do all the tasks mentioned before is not an easy task but companies like China 2 West with over a decade of experience Manufacturing goods from China to the world are capable to take you manufacturing needs to a Global scale.

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