Contract Manufacturing

1. Contract Manufacturing Project Directors: Michael H. Cole, Ph.D., Scott J. Mason, Ph.D. Research Assistant: Tze-Chen Hau The Logistics Institute Department of Industrial Engineering University of Arkansas

2. Formerly the Enterprise Network Group of Lucent Technologies • A leading provider of communications systems and software for enterprises, including businesses, government agencies and other organizations • “Communications without boundaries”

3. What is Contract Manufacturing? • Contract manufacturing is an environment in which customers control the engineering design, change features and options at will and demand off-the-shelf, rock bottom prices. • Contract manufacturers cover the scope of the supply chain process that encompasses all functional activities from product development, demand management manufacturing, procurement and customer support.

4. Why Contract Manufacturing? • Short product life cycle • Global competition • Greater efficiency • Cost reduction • Large volume procurement of consumables and components • Better utilization of high cost capital infrastructure and manpower and needed process control • Improved yield with better quality • Smaller lots • Lower inventories

5. Contract Manufacturing Advantages • Reduce production cost • Lower overhead associated with manufacturing • Lower material cost • Eliminate cost associated with establishing a certified Quality System (ISO) & Statistical Process Controls • Reduce time to market • Eliminate time associated with developing and validating manufacturing facility • Reduce time and resources associated with production scale-up • Provide high quality product at any scale

6. Contract Manufacturing Issues • Potential reduction in company manpower • Reduction in sustaining engineering • Potential loss of market visibility