PLM and contract manufacturing processes

PLM and contract manufacturing processes


Globalization and contract manufacturing are two important trends that shaping modern manufacturing. Companies are using contract manufacturers (CM) for different purposes – design, component supply, assembly, fabrication, etc. In some industries such as electronic, contract manufacturing is an absolutely vital part of your product success. My attention caught by EE Times article: 5 Don’ts and Do’s for Working with a Contract Manufacturer. It is short and sweet – I certainly recommend you to have a read.

Here are my favorite two recommendations – prepare detailed documentation and design for manufacturing.

Prepare Detailed Documentation — I don’t think it’s possible to under-communicate when it comes to providing instructions to a CEM. The more CAD files, schematics and specs you deliver with your design the better, from our perspective. And don’t forget to provide a comprehensive bill of materials with alternate part numbers – or have your CEM do this for you.

Design for Manufacture — DFM essentially means considering how easy and cost-effective it is to manufacture an assembly, and designing to reduce those costs. You need a manufacturing mindset to do this well, so leave room for a DFM review and adjustments in your plans.

Thinking about contract manufacturing processes took me back to my 3 modern BOM management challenges. Bill of Material is an important key element in both – documentation and design for manufacture. Very often contract manufacturing work is focused on processes management by ERP system. However, you need to have solid PLM foundation to start thinking about CM work earlier in the process.

So, what are critical elements of PLM system to support your CM processes:

1- Access to component libraries. To have information about components, availability, cost and other parameters such as regulation is critical. To replicate this information into your PLM system is possible, but not reliable and not scalable. Check how PLM system can access this information online or federate it with ERP system you have.

2- Flexible and granular BOM management. You need to organize bill of materials in the way engineering and CM will be able to access it. By doing that you will allow early access to all parties involved into design and manufacturing to access product information.

3- Change management. Everything is changing. It will happen to your design and manufacturing plan too. Find a tool that allows you to manage traceability of changes alongside to bill of material and manufacturing plans.

4- Security. You need to have right technology in place to isolate information that belonging to different CM and subcontractors. It is important to maintain your business relationships and not to disclose sensitive information.

What is my conclusion? Globalization and cost competition leads companies to find somebody else to produce components and outsource specialized work. In many domains, CM is a way to structure industry (think about fabrication and electronic manufacturing as best examples). It leads to outsourcing, offshore and many other options to make the same work in a different places. Bill of materials (BOM) is a critical element in supporting of contract manufacturing. You need to have an ability to organize BOM in a way that allows to all involved organizations to access and make changes in the controlled way. Just my thoughts…

Best, Oleg

Image courtesy of Stuart Miles at



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