Contract Manufacturer Selection

With the help of Insight Solutions Global, the client found the ideal supplier to deliver their products on time and on budget, developed a healthy supplier relationship, and gained more control over the supply chain.

About the client

Industry: Consumer electronics

Product: Smart wearable product

Company Size: Startup

Location: United States

Contract manufacturer selection process

Challenges

  • With no prior selection, the client co-operated with a tier 1 contract manufacturer (CM) for new product introduction (NPI) and mass production introduced by third-party; 
  • The manufacturing service agreement (MSA) was not reviewed or advised by any manufacturing professionals; 
  • The client wasn’t sure how much to pay, though appreciated CM’s capabilities and been assured of “the best deal”;
  • The tier 1 CM charged high prices for all of the engineering support (non-recurring expense), and production line setting up and idle capacities; 
  • Lacking experience and sources, the client relied heavily on the tier 1 CM for sub-supply chain sourcing and management, thus losing the bargaining chips
  • The client did not have enough access to critical component suppliers; 
  • With no cost risk highlights or verification method, the client was charged excessively on excess and obsolete (E&O) parts, product price variance (PPV); 
  • The CM did not support the client’s tight-scheduled Black Friday and Christmas sales because of lacking resources; 
  • The business relationship between the client and the CM was strained;
  • The client failed to get related data from the CM when proposed to shift to a different CM for tooling and fixture; 
  • The client’s company was expected to be acquired by a Swiss company, but not without a solid CM partner to deliver high quality products on time and on budget. 

How we helped

The proposed scope of work
  • Aligned with and understood critical commercial and technical requirements with client’s CEO and CTO; 
  • Jointly defined, reviewed and agreed on the request for quotation (RFQ) and MSA
  • Reached out to 6 other supplier candidates for further discussions; 
  • Assessed, reviewed and verified potential suppliers’ capabilities in fulfilling the requirements; 
  • Ran SWOT (strengths, weaknesses, opportunities and threats) analysis on the supplier candidates; 
  • Down select 4 supplier candidates, and ran further reviews; 
  • Did a one-week onsite assessment with the CTO, and advised pros and cons after each visit; 
  • Reviewed RFQ responses to benchmark the quotes
  • Provided MSA negotiation strategies and tactics to earn the client a fair deal. 

Results

  • Successfully selected the ideal supplier for the client, fixing the previous problems; 
  • Reduced 22.5% of the overall cost, which contributed to saving $112,500 in the first year; 
  • The client gained more potential to be acquired by the Swiss firm. 

More customer stories

Technical Due Diligence

Insight Solutions Global delivered a detailed 105-page Technical Due Diligence report to help the client make the decision to invest an US company whose operation center and supply chain are in China.

Read More »

Supplier Assessment

The client had little visibility into the capabilities and operation details of the factory due to lacking of direct communication. Insight Solutions Global bridged the gap, drove the supplier performance, and increased the yield rate to 92.8%.

Read More »

Ready to talk about your project?

Give us a shout and we'll be in touch shortly.