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Why OEMs Must Cloud-Sync Contract Manufacturing and Inventory Data?

Hosting your contract manufacturing software and inventory management software in the cloud brings a comprehensive outlook of these departments to the supply chain planners. With real-time inventory status being updated by contract manufacturers in the cloud portal, supply chain stakeholders are benefited.

Contract manufacturing services market is expected to grow exponentially in the coming years, with just the electronics contract manufacturing services expected to reach USD 554.2 billoin by 2026. Besides this, pharma, retail, automotive industries are bound to make the contract manufacturing market burgeon at a rapid pace. 

Considering this, OEMs hiring contract manufacturers must think of their production counterparts as strategic partners rather than as isolated entities far removed from their day-to-day operations and only involved in delivering their stipulated output.   

To ease the execution of manufacturing by an outsourced partner and in line with the quality standards laid down by your organization, you need to give them visibility into some of your own systems. And, this can be done by letting your contract manufacturing software and your inventory data management software connect with each other.

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This is necessary, because contract manufacturers either take up consignment manufacturing or turnkey manufacturing. In the first model, your organization is expected to provision the outsourced manufacturer with all the raw material needed for production, and your manufacturing partner delivers the finished products. Whereas in the turnkey model, your outsourced manufacturer takes on all aspects of production from procuring all the inputs to delivering the finished goods and sometimes even ensuring quality checks.

However, in both these models, it’s very critical that contract manufacturers access inventory management dashboards in the cloud to ensure process efficiency. If contract manufacturers are working under the turnkey model, then your organization must know when the inventory has run out and if there will be production delays due to this, as this can snowball into disrupting your supply chain cycle.

Cloud: Enabling Link between Contract Manufacturers and Inventory Management

While most organizations may have their Material Requirement Planning systems in place, they may not be able to preempt requirements at a granular level for the contract manufacturers. Facilitating data accessibility through the cloud can help both parties, and cycle counting for inventories also becomes simpler for your numerous contract manufacturers, especially if they are across the globe and in different time zones.

Another reason to link your contract manufacturing software to your inventory data in the cloud is to ensure a smooth supply chain process. Supply chain planners are tasked with knowing if the contract manufacturers will deliver the products in time. Linking your inventory data in the cloud highlights the gaps therein making forecasting easier, while also helping the function support the Materials Planning department to provide raw material in time. It also helps them to understand the inventory procurement challenges of smaller supply chain units catering to the primary warehouse.   

Such real-time inventory data accessibility through the cloud for contract manufacturers helps make decisions like how much inventory is available to make finished goods, how much is still needed to process the order, has the available inventory undergone a quality check before being used, and similar aspects.

MME (Minnesota Mold and Engineering) Group’s video below will show the complexities involved in contract manufacturing and how cloud portals can simplify many of these tasks with visibility into multiple sections at one time to ensure time and process efficiencies.


How Cloud Gives Clarity to the Contract Manufacturing and Inventory Management Vision

Hosting your contract manufacturing software and inventory management software in the cloud brings a comprehensive outlook of these departments to the supply chain planners. With real-time inventory status being updated by contract manufacturers in the cloud portal, supply chain stakeholders are hugely benefited.

Often, OEMs create their demand data in their headquarters and contract manufacturers may be left out of the loop. If the data is synchronized on the cloud, information regarding demand and supply decisions becomes clear to both the OEM and the contract manufacturer. Giving access to supply chain data to contract manufacturers helps their business goals of being cost efficient without storing inventory beyond just-in-time requirements.

According to AMR Research, “Companies must manage their inventory risk in a more innovative way. They need visibility and assessment tools that can measure and report the risk.” Cloud offers these options, as it can extract data from an OEM’s ERP and supply chain and integrate it in an intelligent manner to the contract manufacturer’s service data to throw up real-time insights. This also helps both OEMs and contract manufacturers to preempt breakdowns and take preventive actions, thus reducing possible liabilities on both ends. This brings about mutual understanding and trust between the OEM and contract manufacturing partners for the impacts that such sudden business changes can cause.

For instance, contract manufacturers for high-tech consumer electronics face short product lifecycles. If the data has been managed in the cloud, it can even give scenarios of how bringing new products into the market at a particular time is more cost efficient than at another time, considering the inventory available, the supply chain effectiveness at the time, labor costs involved – all working towards the business goal of improving revenue generation.

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Benefits for OEMs to Synchronize Data in the Cloud  

Here’s a list of how OEMs benefit from bringing their contract manufacturers data and inventory data and synchronizing it in the cloud: 

  • Drives efficiency of operations in line with business goals and brings increased value to both parties by initiating just-in-time inventory management.
  • Improves supply chain and delivery management.
  • Brings in better compliance and quality control by automating complaint management and inculcates trust and transparency between OEMs and contract manufacturers.
  • Mitigates risks of inventories being wasted for contract manufacturers.
  • An automated dashboard drawing in data from various sources can reduce miscalculations in inventory cost.
  • Optimal use of inventory and contract manufacturer’s resources with efficient material handling.

Clearly, there’s immense value in bringing in your contract manufacturing software and your inventory management software into your cloud and synchronizing their dashboards. Work with Katalyst Technologies experts for the Manufacturing & Engineering industry and assimilate all your contract manufacturing data into the cloud for achieving your 2020 business vision. 

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