Contract manufacturing is the production of components or products by one company, under the label or brand of another company. Component and product designs can be based on the manufacturers’ or the customers’ own drawings, samples and specifications.
Yes, but we prefer both if possible. We often work with only one or the other, but by themselves, neither is optimal. It is important to note that samples do not provide tolerances and drawings usually do not reflect a final product. So, it is always best to have both whenever possible. If necessary, we often produce production drawings when only samples are available. If you have neither, we can produce engineering drawings.
No. Full container product orders are not necessary for two reasons:
First, we often ship multiple products in a single container for a client. This increases inventory turns, minimizes capital investment and maximizes flexibility for clients. We would actually prefer to ship multi-product containers as it enables clients to maximize the use of our services and capabilities. We most often ship in 20’, 40’ and 40’ high cube (tall) containers.
Second, we often ship less than full container load (LCL) quantities for one or more products. However, it’s important to remember LCL shipments require extra handling, incur additional freight expense and result in longer transit times.
Usually, we invoice clients a DDP (Duty Delivery Paid) price for products shipped. The DDP price is inclusive of all product, freight and import costs. The only DDP price adjustments are Less than Full Container Load (LCL) freight surcharges and a Currency Exchange Rate (CER) credit or debit based on any change in the CER at time of shipment. This means your DDP price is an “all in” cost, without any surprises.
For other services (engineering, testing, certification, etc.) we invoice customers based on a mutually agreed fee and terms.
Ordinarily, we invoice clients separately for tooling. We view tooling as an investment to facilitate production which is not amortized in the product. Our tooling fees are typically 25% to 50% lower than domestic quotes, but it varies by product. Tooling fees are paid only after a confirmation sample is approved by our client, but prior to production.
Once we confirm a client’s purchase order and receive a production deposit, we prepare any necessary production tooling. When the tooling is finished, tested and approved by our Quality Manager, a confirmation, or 1st article, sample is produced for our client’s inspection and approval. One confirmation sample is provided at no charge. Should any additional samples be necessary, often for testing, these are provided at the quoted DDP price plus freight charges. Once the client has inspected and approved the confirmation sample(s), our U.S. based team authorizes production.
It depends upon the product. If the product is a commodity or is reasonably simple to assemble, there may be no additional expense other than the DDP product cost. However, if drawings are not available, the product is large and/or complex, the product requires testing or certification or there are other client requirements, there may be additional expenses. These could include:
- Freight: if a product is greater than 5kg in weight, we will make airfreight arrangements for a confirmation sample and usually invoice the actual cost to deliver the product for approval
- Engineering: if drawings are not available or changes to a product are required, we may invoice for the preparation of production drawings
- Testing: if raw materials or finished product testing is required, we may need to invoice for this service
- Certification: if a product must be certified and we are asked to arrange same, we may need to invoice for this service
- Sourcing: if a special raw material or component is required and must be shipped from the U.S. or elsewhere to our facility in China, we may need to invoice freight and import fees for that raw material or component