Getting the Most Value From Contract Manufacturers: Why Cloud-Native PLM Is Key

Traditionally, contract manufacturers (CMs) have been the go-to experts for building products. Working in contract manufacturing myself for over seven years, I recall many occasions when we would start assembling a product and soon discover that components were missing. All the artifacts to source parts and build an assembly were not in sync. The CAD design that we received from the original equipment manufacturer (OEM) was not consistent with their bill of materials (BOM) and approved manufacturer list (AML) from ERP.

Basically, we were trying to complete a puzzle without all the pieces. This was a common theme for many CMs. First, there was no system in place to ensure the CAD design, BOM, and AML were always in sync. Second, teams could not collaborate on this critical information in real time. Build packages were transmitted electronically via email and FTP folders while engineers were still updating the design.

Because we were not fully embedded in the OEM’s product development process and were working in silos, it was nearly impossible to identify issues that would impact the final shipment.

Thankfully, changing market dynamics are driving OEMs to rethink their product development practices and look at CMs in an entirely new light.

A new strategic partner in product development

Amid today’s intensifying competition, product differentiation and speed to market are key. Companies must turn on a dime to address unforeseen supply chain disruptions and meet ever-changing customer demands. They must also navigate an evolving regulatory landscape encompassing sustainability, quality, safety, and other stringent requirements.

Consequently, CMs are becoming an end-to-end strategic supply chain partner, participating in all aspects of product development—from supply driven design, sourcing, validation, and manufacturing to delivery, regulatory compliance, and maintenance.

Through their dealings with customers, CMs garner a wealth of knowledge regarding different technologies, materials, manufacturing processes, and industry regulations. They are also part of a highly sophisticated and expansive supply chain network. By making CMs an extension of your business, you can tap into their global footprint, resources, and expertise. In turn, you can stay focused on innovation and other core competencies.

Ultimately, CMs help companies deliver superior products in the shortest amount of time and at the lowest cost while mitigating risks and meeting regulatory requirements.

Why frequent collaboration with CMs is critical

Regular engagement with CMs throughout the entire product development process offers several advantages. With early access to product designs and bills of materials (BOMs), CMs can recommend the most suitable parts, tooling, and fabrication methods. They can source components and materials with shorter lead times and ensure they meet cost, quality, and regulatory criteria. This helps optimize design for manufacturability and minimize production delays. Additionally, CMs can suggest alternate materials or assemblies that yield more sustainable designs and reduce supply chain risks.

Addressing communication barriers

Despite their expanding role, CMs often struggle to collaborate effectively with internal product team members. Correspondence usually occurs via phone, email, or chat apps. What’s more, product information is authored and maintained in multiple locations (e.g., CAD, spreadsheets, shared drives, enterprise resource planning systems). With information constantly changing, it’s difficult for everyone to identify the latest product revision and keep everything in sync. This disjointed way of working creates errors and inconsistencies which negatively impact material and labor costs, product quality, and the ability to ship product on time.

As you start to establish more strategic partnerships with CMs, it is important to consider the following:

• How will CMs and other external partners gain access to accurate and current product information?
• How can they submit feedback on product designs and change orders?
• How can CMs quickly relay information regarding component cost, quality, and/or lead times?
• How will you track CM tasks that are tied to the implementation of a change order or corrective action?
• How will you ensure only authorized individuals have access to critical IP?

Having a unified and secure digital solution like cloud-native product lifecycle management (PLM) to manage the entire product record helps address these concerns and streamline communication.

Taking CM collaboration to the next level with cloud-native PLM

By linking the product BOM to associated changes and quality processes in a single source of truth, cloud-native PLM keeps everything accurate and up to date. Plus, it enables your internal teams and external partners to securely access product information from anywhere using a web browser.

With cloud-native solutions like Arena PLM, you can define the type of partner engagement through role-based access controls. For example, certain partners might have limited access, since they only need to retrieve build packages. In the case of CMs that have more strategic relationships, they can provide regular feedback on designs through the formal engineering request and change process. They can also readily submit input via informal online chats.

Engaging CMs in this manner minimizes supply chain risks, production errors, and delays—all things that prevent you from meeting your cost targets and getting quality product out the door.

Another key aspect of Arena is the security measures that are in place to protect your IP and monitor user activity. You have complete control over who’s viewing and downloading your information as well as the type of information they access. Additionally, you have a full audit trail of when users access the system and the type of actions they take. This is critical for companies that are regulated by various export controls and/or exposed to product counterfeiting.

Organizations realize these benefits without the need for IT to set up users, configure firewalls, or develop custom scripts to control access. Any authorized Arena user can enable secure supplier access in minutes.

Bottom line: If you’re looking to get ahead of the competition in today’s volatile environment, consider expanding your relationship with CMs. To reap the full benefits of the partnership, you must embrace a proven collaborative solution like cloud-native PLM.