From the initial inception of an idea to final delivery of a finished product, contract manufacturing of a brand name product proves to be a systematic challenge. It is a 14 dimensions management job to incorporate all key aspects of a project, a concept presented in previous E-BI literatures. If examined by a systems engineering approach, the product contract manufacturing operation can be described as establishment and management of technologies, process development, manufacturing chain, value chain optimization, and a supply chain.
For every unique brand name product manufactured, the development of a new system of unique manufacturing processes is required, as well as a set manufacturing chain to accomplish each process. In order to have the manufacturing chain work effectively, it needs to be improved and optimized periodically, the process controlled, and the supply chain managed in order to minimize risks arising from day to day operation. Once developed, this system works as an ecosystem that consist of many independent contractors and is unique to this particular brand name product. The system appears when the product build process starts and disappears when the build process finishes so that all manufacturers and sub-contractors can use their resources to work on other projects.
Feasibility study, technology innovations, process development, and validations at earlier stages
A new product most likely introduces original features, which bring to the world unique functions or form factors that offer new value and experiences to its customers. To make such a product, the contract manufacturing solution must develop new processes, adapt new technologies and utilize new materials from manufacturers or contractors sourced around the world. Innovation and validation of each new step in the process have to be executed in a timely manner. The safety, reliability, and repeatability of all of these processes need to be tested and certified according to the related standards of every country it will be sold.
The development of a unique product specific manufacturing chain
Once manufacturing processes are developed, the product build needs a group of contract manufacturers, contractors, or sub-contractors to do the work. This includes a tier 1 final assembler, tier 2 BOM components suppliers, and sub-contractors who process each part. These contractors form up a manufacturing chain tailored to build this particular product. At an early stage, the formation of a functioning manufacturing chain is a milestone that makes the manufacturing of the brand name product possible. Although these contractors can be located globally, critical manufacturers with a centralized location will significantly reduce the management cost, and enhance and synergize a faster chain reaction.
The optimization of the product value chain
Despite all of the efforts with its formation, the product manufacturing chain is not necessarily the best value chain. Since each product will eventually face its own competition in the market, the manufacturing chain will have to compete on all fronts in areas such as cost, quality, engineering capability, MOQ, response speed, priorities, capacity, service capability, payment terms, and many other environmental and political interruptions. Meanwhile, as an ecosystem, the manufacturing chain will also have its internal challenges and risks. So, both demand end and internal operation issues will determine the value proposition of the manufacturing chain. Optimization of the manufacturing chain is to add value by continuously removing incapable contractors and adding high value performers who can solve problems.
In practice, to meet these challenges and minimize risks, we will need to have multiple back up manufacturers in close proximity for each production step. Without these back up resources, value chain optimization will not be possible. In other words, a broader manufacturer ecosystem is vital to achieving a better value chain.
Process control
Process control by veteran experts is the key to value chain success. The manufacturing chain of an established brand name product is part of a buy/sell ecosystem. It consists of many independent contractors ranging from just a few, up to hundreds depending on the complexity of process requirements and the BOM list. When an order is placed, the manufacturing chain needs to be “turned on” immediately and ramped up to expected quality level within a standard lead-time. All people, machines, materials, systems, and processes involved with the chain around the world need to ramp up to operation levels in order to start production. Any failure at any step in any factory can lead to a total failure of the product.
A manufacturing chain ecosystem is not immune to Murphy’s Law, which states anything that can go wrong will go wrong. From time to time, replacement of some contractors may often be necessary, even during the manufacturing stage, because of their inability to deliver quality products on time, or even due to their loss of interest in the job. As stated above, the manufacturing chain will also be subject to disruptions by many unforeseen outside factors. When any of these problems happen, the project management team needs to take immediate action to save and keep the production going. A strong process control with detailed plans across all tiers of contractors is a must to achieve the goal of a reliable manufacturing chain.
Supply chain management
Every product has its own unique supply chain. There are no two supply chains working the same way unless products were made from the same manufacturing chain (i.e. private label). Common supply chain management refers to logistics, warehouse, and inventory management. A broader supply chain includes corresponding manufacturing capabilities, which affects supply chain flow. In this case, the best description of our system scenario would be that it is the supply chain that connects all manufacturers in a manufacturing chain.
To any manufacturer in the manufacturing chain, the speed of response of its supply chain is critical for its performance. With increasing demand of Just-In-Time (JIT), the supply chain response speed has become a performance benchmark of its value chain.
It should be pointed out that a supply chain is not only product specific but also product stage specific. It changes as a product develops into different stages due to variations on its volume, market demand, specifications and service levels.
A product with its own unique manufacturing chain and supply chain
A brand name product, or a unique product, always has its own unique manufacturing chain and supply chain, which is usually deployed around the world for the value chain benefits of cost, quality and other factors. The characteristics of a product is thus defined by both designers, and all manufactures and suppliers in the ecosystem. The product value chain position is driven by its market place, competition, speed, quality and service requirements. Of course, the value chain proposition is always quite different from one product to anther.
In summary, from a systems engineering angle starting from its design, a brand name product emerges from non-existence to a real world high quality product by going through a contract manufacturing system that offers solutions on technology, engineering, manufacturing chain, optimized value chain, and specific supply chain. This contract manufacturing system is very dynamic, facing challenges from both inside and outside. Even after its debut, a project management team still has to revive this contract manufacturing system every time a new order is placed, and control the whole process along the manufacturing chain, remove obstacles, and minimize all impacts, and thus, keep the supply chain moving.
