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Generally, small to medium sized technological firms design, develop, market and sell their products, while they utilize contract manufacturers to partially or fully assemble their products. In “Consignment Manufacturing,” tech firms take on the bulk of supply chain and manufacturing activities and contract out several sub-assemblies, while in “Turnkey Manufacturing” tech firms sub out all supply chain and manufacturing activities.

These supply chain and manufacturing activities consist of purchasing and maintaining inventory, kitting, shipping, receiving, assembly, and training respective personnel to carry out these activities. Hence, turnkey manufacturing is more favorable for the following reasons:

1.       The tech firm:

• Focuses on product design/development, sales and marketing
• Reduces high risk and capital expenditures associated with overhead, inventory and labour costs.

2.       The contract manufacturer:

• Spreads its costs over several projects.
• Employs workers that specialize in and are dedicated to all supply chain and manufacturing activities.

It is best for tech firms to:

• Sign an NDA with the CM to eliminate concerns over intellectual properties.
• Consign exclusively received components/sub-assemblies to CMs for integration into final assemblies.

What is Contract Manufacturing?

It is when a firm, say firm A, hires (outsources to) another firm, say firm B, to manufacture a product or execute manufacturing services. EnCore Manufacturing provides contract manufacturing services for firms developing green tech and high tech products.

When should a firm consider Contract Manufacturing?

It is best for firm A to consider contract manufacturing services from firm B when:

1. Firm A does not have the capacity to create a supply of their product/service to meet its market demand.
2. Firm A has the design, but not the machinery, space, or skilled human labour to manufacture their product or provide the service.
3. Firm A can get a higher profit, save time and improve the quality of the product by outsourcing to Firm B.

The idea is for Firm A to focus on designing, developing and selling their product, and let Firm B manufacture the product prototype or do the mass production builds.

EnCore Manufacturing does just this by helping green tech and high tech firms that are working on cutting edge prototypes by providing supply chain management, production and document management solutions.