Pros and Cons: In-House, Partial Turnkey and Full Turnkey Manufacturing
When it comes to manufacturing, there are many strategies to produce commodities.
An OEM (Original Equipment Manufacturer) may choose to set up its own manufacturing facility and manage the entire process in-house.
Pro: What is good about this option is that the OEM has complete and total control over all aspects of manufacturing.
Con: The downside is that this is a huge expense. Not only do you need a facility and equipment, but also you need people to manage and assemble your products. All of this creates overhead costs. On top of that, it’s a lot of liability, especially if manufacturing is not the core competency of the OEM.
2. Partial Turnkey
Some products require a very unique part or special process. An OEM may choose to manage this part of the manufacturing phase and then outsource the final integration of their system.
Pro: This allows the OEM to control the critical part of the manufacturing process.
Con: It can still require a lot of capital and liability to manage a portion of the process in-house.
3. Full Turnkey
This solution hands the entire manufacturing process over to a contract manufacturing partner. From here, the contract manufacturer or CM manages everything from purchasing materials and managing the entire supply chain to the final test and integration of the entire system or product. It can even entail logistics: shipping final products directly to consumers, inventory management, and field service support.
Pro: A full turnkey solution can save an OEM time and money because they do not have to set up manufacturing in-house or hire a staff to support everything from purchasing materials to assembling their product. It also allows an organization to focus on their core competency and develop the next generation of products or entirely new products and get them to market faster.
Con: The OEM may not have as much control over the process as they would like. But when you partner with the right CM, they should feel like an extension of your team.
At A&D we believe in full transparency. We don’t consider ourselves just a supplier, but your partner. We are committed to helping our customers succeed to their fullest potential. The more successful our customers are, the more successful we are!
Contact us today to find out how we can be your full turnkey manufacturing solution!