You wouldn’t call it the most glamorous job in the world, but for engineers like you and I, building machinery, equipment and other types of hardware is about as fun as it gets. Without a doubt, the headaches of deadlines, supplier management, custom fabricated components and design issues are a challenge. But with great partnerships and a clear understanding of goals, bringing a new machine product line to market can be tremendously rewarding.
Not everyone is cut out to build this type of equipment, but when you understand the benefits, your skillset will span across dozens of industries from renewable energy hardware to medical device equipment and beyond. In this article, I want to talk a little bit about why getting your machine to market with a contract manufacturer can bring some great benefits to your company. Let’s take a deep look at some benefits of outsourcing machinery manufacturing.
In my 13 years in this industry, I’ve taken hundreds of requests from customers in many industries asking for a quote or proposal to manufacture their equipment. Typically, these requests come from engineers and strategic sourcing personnel that have been tasked with scouting a machinery contract manufacturing company that has the skills to build their entire machine and even commercialize it into full scale production volumes.
In most cases, machinery is built in volumes of singles, dozens, or hundreds, not thousands. Companies looking to outsource the manufacture of their equipment realize there are some inherent benefits, but I’m not completely convinced they know exactly what these benefits are, so let’s dig in.
1. Design for Manufacturing and Assembly (DFMA)
DFMA is the practice of using design techniques to optimize manufacturing and assembly time for the final goal of improving price. In our experience, 85-90% of companies outsourcing machinery manufacturing are actively seeking DFMA ideas. They know they need it; they simply have no clue how to do DFMA and aren’t shy about it.
Most OEMs are excellent at developing and preparing the core technology of their machinery, but due to the prototype process usually requiring ordering hundreds of parts from dozens of independent quick turn suppliers just to get the prototype to function properly in the first place, the ability to holistically optimize a new machinery technology for DFMA becomes very foggy. Not to mention that most machine design engineers at OEMs are not required to have this skillset. It ends up falling on the contract manufacturing company, although many lack this skill entirely as well.
2. Commercialization
Moving a prototype machine into repeatable production requires more than increasing build quantity. Manufacturing engineering, assembly feedback, BOM and drawing updates, functional testing, quality planning, sourcing, and production planning all need to mature together.
A contract manufacturer with established manufacturing systems and production resources can help the OEM work through that transition without building every capability internally. The benefit is not simply speed. It is a more controlled path to production that protects quality, repeatability, and functionality as the program matures.
3. Cost
More often than not, one of the first questions OEM teams ask is, “How much does it cost to build my hardware?” There is rarely a simple answer because manufacturing cost depends on the product, production volume, manufacturing scope, quality requirements, and resources needed to support the program.
Outsourcing can reduce the capital and fixed-cost burden of manufacturing complex machinery. Instead of building dedicated floor space, purchasing every piece of production equipment, staffing a complete manufacturing organization, and carrying all engineering and supply-chain overhead internally, the OEM can use capabilities shared across a contract manufacturer’s customer base.
That does not mean outsourcing is automatically less expensive for every program. A meaningful insource-versus-outsource comparison should account for material, labor, tooling, equipment, floor space, utilities, quality, supply chain management, and the internal resources required to support production—not just the contract manufacturer’s quoted unit price.
4. Turnkey Capabilities
The expectation from OEMs when outsourcing machinery manufacturing is that eventually they can place purchase orders for singular line items and viola, a perfectly built machine arrives on time and at the highest quality. From a CM perspective, that is a pretty nice arrangement as well. We’ve talked a lot about New Product Introduction and what it takes to get to that point, but that is the simple definition of “turnkey manufacturer” in our opinion.
To become a turnkey supplier will mean that the CM will have to be willing or able to manage hundreds or thousands of parts, whether custom made or purchased, manage supply chain, quality aspects, assembly and shipping. Great CMs can tout themselves as turnkey the closer they get to offering a “Place PO, Get Machine” arrangement.
A turnkey model can also reduce supplier-management burden. A manufacturer that already has qualified sources for purchased components, fabricated parts, outside processes, packaging, and logistics can coordinate more of the supply chain under one program. That reduces the number of handoffs the OEM has to manage directly and can make it easier to respond when demand or component availability changes.
5. Technology Focus
One of the most practical benefits of outsourcing machinery manufacturing is giving internal engineering teams more time to focus on the product technology they uniquely own. For many OEMs, the highest-value engineering work is requirements, performance, controls, software, process technology, and continued product development—not routine sourcing, assembly coordination, or day-to-day production support.
A capable contract manufacturer can absorb more of that manufacturing workload while the OEM retains ownership of the product and its technical direction. This is often an overlooked benefit because too many times companies want to “do it all” with the people they have instead of leaning on specialized external experts.
I’ll probably spend a vast majority of my career telling the world why outsourcing machinery manufacturer to a CM is a great idea. The benefits are huge and for many companies it is the only option. Download our Guide to Outsourcing Machinery for a full look at how and why to use a contract manufacturer.
