Building Efficiency in the Automotive Manufacturing Supply Chain with Contract Manufacturing

Component part manufacturing is a dated concept. It’s a simple request for a part (metal or plastic) to be created by your chosen supplier and then shipped to you, ready for assembly. But, component part manufacturing lacks any process that can guarantee traceability; it requires you to manage multiple project components for assembly; it builds inventory into the equation; and more besides.

Contract manufacturing for component parts could be the efficiency enabler you need to fulfil your supply chain transformation strategy.

Contract manufacturing of component parts offers OEMs and Tier 1s across all industry sectors opportunities for saving time, resources and production costs; as well as facilitating inventory-on-demand strategy. Your selected contract manufacturer should be looking to add value at every point in the process of delivering your component part order – from technology investment to quality assurance through accreditation to traceability.

As digital manufacturing starts to redefine product development and contract manufacturing becomes the norm, there is no question that CNC machining, precision engineering and additive manufacturing play a significant role in the cost reduction and efficiency improvement process.

From sourcing to delivery

CNC engineering – machining – processes can deliver quantities of parts in a variety of materials, from metals to engineered foams, without compromising those material properties.

Maintaining material properties is all well and good if the materials meet the required quality standards. Can you be sure that your supplier of component parts is going to deliver every part with the same quality standard if you simply request a batch of component parts?

“Producing component parts through a contract manufacturing process is going to give you an assurance of quality and a guarantee of traceability,” says Michael Anderson, Paragon’s CNC Technologies Commercial Manager. “Contract manufacturing is a supply chain integration process that can seriously improve production efficiencies and therefore will deliver competitive advantage.”

By its very nature, contract management results in a bespoke service. Michael points out that contract manufacturing enhances the flow of goods and inventory management through a sequenced process of material sourcing and supply management, design support to ensure manufacturability, capacity planning for machining reducing lead times, management of special processes from finishing to accreditation, quality and inspection, inventory on demand management and customer service, all geared around one product.

While CNC engineering allows for the production of large volumes of component parts, contract manufacturing doesn’t have to revolve around large scale industry products. Contract manufacturing of metallic door handles for a prestige automotive manufacturer will offer comparable supply chain efficiency benefits as contract manufacturing of bumper assembly units.

Contract Management

The Automotive Example

Prestige Automotive Manufacturer

Project brief: To supply 250 car sets of components in accordance with our customer’s build schedule

Timeframe: 18 months.


  • Contract review of project requirements
  • Sourcing of materials in line with customer build rates
  • Material traceability management
  • Heat treatment of base material prior to machining
  • Engineering of process set ups and operation planning
  • Machining of high tolerance parts through multiple machine centres
  • Capacity management
  • 100% CMM inspection of component batches manufactured
  • Management of subcontract processes through supply chain management
  • Documentation of work carried out ensuring the highest quality levels
  • Shipment management
  • Stock management programs, ensuring minimum stocks to accommodate flex in demand

Results: All the above elements are managed in line with customer approvals of production routes, suppliers and quality requirements.

This ensures an open book policy, which in turn is evidence of a proven and trusted supply chain partner.

In conclusion

Contract manufacturing is a proven method of improving supply chain efficiencies and managing quality. We take pride in our abilities to manage the production supply chain of component parts in line with your project needs, so you don’t have to. The end result is increased profit, quality assurance, traceability and timely part production schedules.