How to Help your Contract Manufacturer with Digital Transformation

Jared Haw
Jared Haw
21 October, 2022 | 6 min for reading
How to Help your Contract Manufacturer with Digital Transformation

One of the challenges of manufacturing today is to enhance collaboration with your team and all of your partners. One of the ways manufacturers are moving towards their goal is by adopting digital technology. However, there is always one partner that usually resists a change. This partner is often your contract manufacturing partner. 

This post is going to explain why digital transformation is not just important for your team and company but why you need to convince your contract manufacturer (CM) that it is valuable as well. 

What is Digital Transformation

Accenture describes digital transformation as “the process by which companies embed technologies across their businesses to drive fundamental change.” These technologies are implemented to help your company improve efficiency, make better decisions, improve the overall experience of working with you, and more. 

While it’s great that your company is welcoming new processes that come with digital transformation, it’s important that all your partners do the same as well. This includes your CM that still swears by using Excel.

Why is Digital Transformation Important

Everything affects manufacturing. Whether it’s global events, political tensions, inflation, or whatever, it has an effect on the products you are making. As a result, your CM will be affected by all of these challenges. It’s clear that it’s in your best interests for your CM to have a solution. 

There are many reasons why your CM will want to adopt digital transformation. Here are three reasons why your CM needs to move toward digital transformation:

Make Better Decisions: 

To improve decision-making skills, you need to collect data. How can you make a decision without supporting evidence? Data is your supporting evidence. Here is how a CM can better support you with decision-making by collecting data:

  • Quickly purchase from alternative suppliers
  • Understand costs 
  • Provide real-time status of parts and assemblies

Improved Collaboration

Your CM has access to all of your product data. This product data holds the knowledge of your product. If your product data is messy and not well organized then you can expect a product that is delayed and with quality problems. Creating a well-organized system that you can easily share with your CM will improve overall collaboration.

Improves your Relationship

Moving towards digital transformation can only improve your relationship with your CM. Keeping everyone on the same data will help improve transparency and responsiveness from your CM leaving you more satisfied with their service.

Does your CM Want a Digital BOM?

Excel and spreadsheets have always been the preferred format to send to your CM. The main reason for this is that spreadsheets are easy to read and familiar. However, moving toward digital transformation means you need to move away from sharing spreadsheets. 

The first step is to introduce a digital BOM. Digitalizing your bill of materials (BOM) for your CM will help the way you communicate all of your product data to them. There are 3 reasons why your CM prefers having a digital BOM:

Create a Central Database

The digital BOM brings everything together. It eliminates data silos and creates a single source of truth. No more spending valuable time digging for CAD files, these CAD files are now in the BOM. The digital BOM will not just improve your efficiency but the overall collaboration with all contractors, including your CM. 

Manage Revisions and Changes

If your CM is supporting the development of your product then there will be constant changes. You will need two things:

  1. Set an approval workflow for accepting change requests. It’s important to monitor and ensure all changes are approved before they are released to production. 
  2. Store all historical changes so you can find old revisions. 

It’s not just important to manage these two items during development but in production as well. You will need to go back historically to see which POs shipped out with which revisions. 

Real-Time Sharing

A common slowdown can be due to the time change between you and your CM. Either party needs to wait for the other to send the most up-to-date product data. But, digitalizing the BOM means everyone has access to it instantaneously. This means that everyone always has the most current BOM and product data. 

How to Share Data with your CM

Sharing data with your CM has always been important. It’s important to keep a good relationship and it’s also important to build a new relationship during the request for quotation (RFQ) steps. 

Traditional Data Sharing 

The traditional way of sharing data creates folders with all your different types of product information, such as BOMs, CAD files, work instructions, quality requirements, and more. 

Unfortunately for this, it does not keep everyone together. Let’s take a small example. If you make a minor change to a part, you might assume this will be easy to transfer to your CM. However, once you make that change, you will need to update, the costs, the CAD file, the work instructions because you need to fabricate the part differently, and the quality requirements because you need to check the part differently, and more. Thus you need to go into the folder and make changes to all the data that are dependent on this change. As you can guess, usually not all of these are updated for everyone. Someone is missing out leading to mistakes and loss of revenue. 

Modern Way of Sharing Data

All of the same product information that was shared before still needs to be shared. You just do it in a different way. This is done by creating a single source of truth that replace folders being stored on your machine. 

When sharing product data, the first part that comes to mind is the BOM. The BOM holds the manufacturing knowledge of your product. All product data should also be connected to the BOM. This includes STEP files, work instructions, quality requirements, part specifications, and more. 

Figuring out how to automatically share your BOM is the first step to bringing your CM to the digital age. Once you have this first step, you can implement a change request workflow and other processes to improve your overall efficiency. 

What can you do today?

If you are looking to gain a competitive advantage and navigate through difficult economic times then digital transformation is for you. The digital transformation will keep all of your product data together and manage your revisions and create an ECR/ECO process. Your solution is a centralized platform that connects your team, contractors, and suppliers. 

OpenBOM is a cloud-based PDM & PLM platform to manage your engineering and manufacturing data. Companies from startups to Fortune 500’s use OpenBOM to create a centralized database to bring in, store and manage their manufacturing data. With this infrastructure, users also use OpenBOM to streamline both their change management and PO processes.

If you need to improve the way you manage your data and processes, share data instantly, or to collaborate with contractors and suppliers then contact us today for a free consultation


Jared Haw

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