In today’s competitive manufacturing landscape, OEMs are under growing pressure to deliver high-quality products faster, more efficiently, and at lower cost. But achieving these goals often requires more than simply sourcing individual components—it demands strategic partnerships that can streamline operations and add meaningful value across the production process.

Value added assembly has emerged as a game-changing solution, offered by a select group of contract manufacturers who go beyond the traditional role of supplying parts to deliver fully assembled, tested, and ready-to-install units. By partnering with a supplier that provides this kind of service, OEMs can unlock hidden efficiencies and create meaningful advantages across their operations.

Understanding Value Added Assembly

At its core, value added assembly refers to the process of combining multiple parts and components into complete or semi-complete mechanical or electromechanical units. This approach sets apart a select group of specialized contract manufacturers, who deliver significantly greater value to OEMs compared to traditional suppliers focused solely on machining or fabricating parts.

Unlike standalone machining and fabrication shops, a turnkey contract manufacturing partner like PEKO takes on a much broader role—assembling mechanical components, integrating electrical systems, conducting functional testing, and preparing the final product for installation or shipment. The result is a fully integrated, thoroughly tested, and packaged unit that arrives ready for immediate use.

A true value added assembly provider typically offers a broad range of integrated services, including:

  • Mechanical assembly – joining parts and components into functional units
  • Electrical system integration – incorporating wiring, controls, and electronics as needed
  • Functional testing – verifying product performance, reliability, and safety
  • Packaging and labeling – preparing products for shipment with professional packaging and clear labeling
  • Quality assurance – maintaining rigorous standards throughout the process
  • Logistics support – assisting with scheduling, warehousing, and delivery coordination

By outsourcing these complex and labor-intensive tasks to a trusted supplier, OEMs reap numerous benefits, from cost savings and increased throughput to improved flexibility and streamlined operations.

The Power of Value Added Assembly for OEMs

Not all suppliers are created equal. Many suppliers specialize strictly in component manufacturing, leaving OEMs to manage assembly, testing, and packaging in-house or across multiple vendors. However, those contract manufacturers who do provide value added assembly offer OEMs a distinct competitive advantage. Below, we explore the key ways these suppliers can transform manufacturing operations and contribute to a healthier bottom line.

1. Simplifying & Consolidating Your Supply Chain

Modern supply chains are notoriously complex. Manufacturers must navigate lengthy Bills of Materials (BOMs), intricate ERP systems, multiple suppliers, and complex delivery schedules.

Managing these moving parts takes significant time, effort, and resources, overwhelming even the most experienced teams.

Suppliers with value added assembly simplify this process by delivering fully assembled systems or subsystems.

Benefits include:

  • Reduced vendor count and POs, lowering purchasing workload
  • Simplified inventory management with fewer SKUs to track
  • Lower risk of part shortages, delays, or mismatches

Rather issuing separate POs for brackets, bolts, housings, panels, and fasteners from multiple suppliers and managing dozens—or even hundreds—of individual part numbers in-house, OEMs can issue one PO to a single partner for a complete assembly.

2. Freeing Up Floor Space for Core Operations

Floor space is one of the most valuable and often under-optimized assets in manufacturing. When OEMs dedicate space to low-value tasks like sub-assembly and kitting, they reduce the space available for high-value production activities. Over time, this can quietly erode profitability and constrain a company’s ability to scale.

Value added assembly services allow manufacturers to outsource labor-intensive work and reclaim critical shop floor space for core operations.

It is especially useful when:

  • Physical space is constrained or expensive
  • Expanding product lines or production volumes
  • Reducing in-process inventory and improving flow

By shifting assembly work to external partners, OEMs can increase throughput, improve process flow, and defer costly facility expansions.

3. Improving Agility to Manage Demand Fluctuations

One of the most persistent challenges in manufacturing is demand volatility. Even the most sophisticated forecasting models cannot fully predict shifts in customer orders, market trends, or macroeconomic conditions. As a result, manufacturers must balance the risk of underutilized labor during downturns against the risk of capacity shortages during surges. Partners with value added assembly offer OEMs the flexibility to scale capacity up or down as needed, without overburdening internal teams.

Benefits of this flexible model:

  • Scale resources up or down without overburdening internal teams
  • Reduce risk during unpredictable market swings
  • Reallocate in-house labor to profit-driving activities

By tapping into a partner’s value added assembly capabilities when needed, manufacturers create an agile operation that can effectively respond to short-term fluctuations and long-term market changes.

Why Value Added Assembly is a Game-Changer

Incorporating suppliers with value added assembly into your supply base is a transformational strategy that helps OEMs:

  • Streamline operations
  • Reduce overhead and administrative costs
  • Improve manufacturing space utilization
  • Enhance flexibility and responsiveness
  • Mitigate risks across the supply chain

Rather than spreading limited resources across dozens of tactical tasks, companies can focus on their core competencies—whether that’s product innovation, customer engagement, or market expansion. Meanwhile, their strategic partners handle the complex, labor-intensive work of assembling, testing, and packaging products.

The PEKO Advantage: A Turnkey Contract Manufacturer That Goes Beyond Parts

At PEKO, we have embraced value added assembly as a core part of our contract manufacturing service offering. In addition to producing precision CNC-machined and sheet metal fabricated parts, we:

  • Assemble those components into functional units
  • Integrate electrical systems when required
  • Conduct rigorous functional testing
  • Provide customized packaging and labeling
  • Deliver complete assemblies ready for immediate use

The result is a turnkey solution that makes a meaningful difference for our customers. By offering these integrated services, we help OEMs simplify their supply chain, reduce internal workload, and accelerate time-to-market. We take on the heavy lifting so your team can focus on what they do best—whether that’s innovation, product development, or expanding into new markets.

As OEMs face rising cost pressures, labor shortages, and increasingly complex supply chains, choosing the right contract manufacturing partner has never been more important. Not all suppliers can offer the same level of service—and those that go beyond parts to provide value added assembly deliver a clear competitive edge.

Ready to explore how value added assembly can improve your operations? Contact PEKO today—we’re here to help you drive efficiency, cut costs, and boost your bottom line.