Contract manufacturing, also referred to as “outsourced manufacturing,” “contract fabrication,” or “build-to-print” manufacturing, is a strategic partnership where one company fabricates parts, components, or even complete products to the specifications provided by another company. In certain industries, this is also known as private label manufacturing.
In this relationship, the commissioning company provides detailed specifications—such as dimensions, materials, and tolerances—while the contract manufacturer focuses on building the product in their facility. Typically, the contract manufacturer is not involved in design or engineering but instead executes production based on the client’s provided design. However, many companies rely on the expertise of contract manufacturers for design optimization, material recommendations, or cost-saving alternatives, often as a value-added service.
Why Companies Choose Contract Manufacturing
There are several compelling reasons why companies choose to work with contract manufacturers instead of building their own products, parts, or equipment in-house:
- Expertise and Specialization: Contract manufacturers possess established skills, advanced equipment, and trained labor, which allows them to deliver quality results efficiently.
- Cost Efficiency: They already have the infrastructure and processes in place, avoiding the significant capital investment required for machinery, training, or facility expansions.
- Scalability: Contract manufacturers can adapt to production demands quickly, whether for prototyping or large-scale production.
- Quality Assurance: They maintain stringent quality control systems, ensuring consistent results.
- Logistics and Supply Chain: With extensive experience in packaging, materials handling, traceability, and delivery, contract manufacturers simplify the production process for their clients.
Types of Contract Manufacturing
There are different types of contract manufacturer, and different levels of contract manufacturing service.
- Component manufacturing The contract fabricator builds parts or components, which are shipped elsewhere for final assembly.
- Proof of concept/prototyping In order to provide proof of concept, or test the manufacturability of a product, some contract manufacturers provide prototyping and proof-of-concept builds. Some offer “design for manufacturing” services, including design reviews for improvements, or to optimize tolerances.
- Subcontracting Similar to component manufacturing, a contract fabricator may be hired to complete one part of a complex assembly, due to specialized skill, accreditation or equipment. This could include assembly, 100% user testing or functional testing, full traceability or other specialized skills that can be completed better and more efficiently by the contract fabricator.
- End-to-end production and assembly The contract fabricator builds all components to provided specifications, completes the assembly and handles all the logistics. The final product will be branded with the commissioning company’s name.
Advantages
- Capital Investment A contract fabricator has already invested in the facility, machinery and materials necessary for a variety of fabrications. The costs of development, labour, raw materials and manufacturing equipment can be prohibitive, especially for a smaller company. By hiring a contract manufacturer, you can focus on the research, design and engineering components and leave the manufacturing costs to a company who can manufacture your product parts, components or end-to-end product accurately and efficiently.
- Efficiency Contracting with a contract manufacturer to build part or all of a custom metal fabrication can allow you to scale faster by focusing on sales and building markets rather than the manufacturing itself.
- Expertise Outsourcing all or part of the manufacturing process to a custom fabricator allows you to leverage the expertise of the fabrication company. The contract manufacturer has an established, dedicated facility and in-house expertise and the knowledge of all the documentation and traceability requirements needed. Leveraging expertise by outsourcing allows you to allocate your resources on your strengths to grow your business.
- Economies of Scale The contract manufacturer may have access to economies of scale for materials, parts and components that a smaller manufacturer will not have access to. That can result in a more competitively priced final product than could be produced by the contracting company.
- Increased Production Contract manufacturers have the ability to scale up production more easily than a smaller company. They already have the facility, material, machines and labour to increase production, whereas a smaller company would need to invest in additional resources to produce the same results. They are able to flex more efficiently, whether you need one unit for a proof of concept or several hundred, and deliver the results faster.
- Supply Chain In addition to the economies of scale, dedicated contract manufacturers will have access to alternative suppliers to mitigate supply chain issues that a smaller or less experienced manufacturer may not be able to access.
- Quality Control Contract manufacturing has an extra level of quality control. While you will have your own set of quality control measures, reputable contract manufacturers stand by their work and their reputation, and will conduct a full QC of their own.
Disadvantages
- Less control Ceding control of the manufacturing to a third-party contract fabricator requires a level of trust. For hands-on management, that can be difficult, and trying to micro-manage a third party will result in delays, miscommunication and tension.
- Risk of Miscommunication Errors in specifications, unclear instructions, or lack of communication can result in defective products, delays, or additional costs.
- Production delays Unless your contract specifies, contract manufacturers build-to-print to your specifications. They may have no involvement in material selection, design consulting, engineering or design review. If there is an error with the specifications, or a lack of clarity, there could be production problems or delays that may not happen when building in-house. If the finished product is “built to spec” but not what was expected, then rebuilds will cost time, waste materials and add significant cost to the original project.
- Competing priorities When you manufacture in-house, you have the ability to shift timelines and priorities if schedules change. When you outsource to a contract manufacturer, your priorities may conflict with the priorities of their other customers, and it may not be possible to change a timeline.
Why Partner with a Contract Manufacturer?
Despite some risks, contract manufacturing can be a powerful tool for companies aiming to scale production, reduce costs, and leverage expertise without the need for significant investments in infrastructure or equipment. A successful partnership allows companies to focus on their core strengths—research, design, sales, and market growth—while leaving production to the experts.
Let Abuma Manufacturing Be Your Partner
At Abuma Manufacturing, we specialize in contract manufacturing services that help companies reduce costs, increase efficiency, and deliver superior products. With decades of experience, we offer:
- Component Manufacturing
- Prototyping and Design-for-Manufacturing (DFM)
- Assembly and End-to-End Production
- Quality Assurance and Traceability
Let us help you bring your designs to life with precision, quality, and reliability.
📞 Contact us today at 519-659-6376
✉️ [email protected]
We’re ready to support your project from concept to completion.
Check out our automation, tooling and die manufacturing division and sister company at Armo Tool Ltd. for all of your automation and tooling needs.
