5 Tips To Select a Great Contract Manufacturer in China or Vietnam

If you develop your own products, and if you intend to make many thousands of them in China or Vietnam, it usually makes sense to work with a contract manufacturer. (They might also do some fabrication in-house, but their major added value is usually in the assembly & testing work and in the management of all the component suppliers.)

They’re a different beast from the run-off-the-mill OEM/ODM suppliers that you find on every page of alibaba.com. But how to decide which one is the right supplier for your project?

5 Questions you need to answer to find a really great contract manufacturer

Let’s look beyond the obvious considerations (e.g. are you really talking directly to the manufacturer; are their processes in good order; do they have English speakers; do they have an export license; is your product in their scope of business; etc.).

Here are the 5 questions I’d suggest you ask yourself and ways to check if your proposed Chinese or Vietnamese supplier can reach your requirements:

1. Do they ask all the right questions about your product?

Notice I didn’t write “have they already done a product 95% similar?” because that’s what you are looking for when you buy ODM and, to a certain extent, OEM… not when you are looking for a contract assembler.
Let me explain why.
They need to have the ability to design and execute the assembly, testing, and packing of your product. And this includes purchasing the parts, managing the tooling fabrication, and a few other things of that nature.

How to ensure they can do that the right way?

One good way is to check if they recognize some of the major challenges of your project when you describe it to them.
If your product has electronic parts but they have never made any electronic products, of course, that’s a red flag. But if, say, they haven’t made any inflatable products, it doesn’t mean they will mess things up on a product that includes inflatable parts. They need to understand the challenges and risks, they need (if you haven’t already done so) to source the right supplier to make those parts, and they need to manage that whole process.

2. Do they promise that you will have full visibility on the component suppliers?

You really don’t want to be fully dependent on your assembly supplier. You should own your own supply chain. Otherwise, switching to another contract manufacturer becomes very difficult and they might (probably will) take advantage of you.

How to get potential suppliers to make a specific promise?

Ask for an example of BoM (Bill of Materials) that they will send to you, not only at the start but also at a certain periodicity since things do change over time. It may all be empty, but you need to make sure it includes the full supplier company names, unit prices, MOQs, lead times, and other important elements.

If they don’t let you see who makes what parts, they are acting as an old-style trading company. In China and Vietnam, we are surprised how often that still happens.

3. Can you see the potential for a ‘central bottleneck’ to appear?

Of course, when you are visiting them and discussing potential business, you will meet with a salesperson, a project manager, and a few good engineers and managers. But you need to start looking for a very common problem which typically unfolds as follows:
a) One person (usually a project manager, or PM) will be your central point of contact, and the salesperson who doesn’t understand the technical aspects will be relegated to the “money side” of your project.
b) That PM is often working for other customers, too. Those other customers are often very pushy, and sometimes much larger than you are.
c) At some point, the PM gets overwhelmed with the challenges and urgency of another project… and nothing moves on your side.

How to assess if production bottlenecks are likely?

Inquire about the way they handle the work, who does what, how many PMs they employ, whether their R&D and NPI engineers are usually very busy, and what happens when a big customer ‘puts a gun to their head’, figuratively.

4. Do you have visibility on their internal quality control inspections & tests?

This seems to be a very basic requirement… and yet, the ‘old-style trading company’ mindset I mentioned above is still prevalent, and it comes with a heavy dose of opacity and short-term thinking amongst many contract manufacturers.
(If the buyer can’t see what the issues are, they will proceed with shipment and payment, right?)

How to stay in the loop?

Again, ask for details:

• When do they do formal inspections/tests?
• How is it documented? What can they communicate to you?
• Will you see a failed report sometimes, followed by a passed report if the underlying issue has been addressed properly?
• Do they open a corrective action report for serious problems? Is it shared with the customer?

5. Do they have a proven process for going from development to production?

No two product developments are alike. I get it. However, when the product is relatively complicated, getting the development and pre-production phases right is the only way to get production right. Having no overall process (i.e. relying on luck and on people’s intuitions) won’t cut it!

How to test if they do have the required process?

When you give them an aggressive deadline, do they explain specifically that tasks X, Y, and Z need to take place if you don’t want high risks of getting into ‘production hell’? That’s a good sign! In that case, you can have an informed conversation and decide what risks you are willing to take (and how to mitigate them) in order to go faster.

*****

I hope this is helpful for those searching for a contract manufacturer. If you have other tips for this critical supplier decision, or if you disagree, please share it in the comments section below or send us a message.

Related article:

How To Qualify Component Suppliers At The Design & Prototyping Stage