If you find yourself placing repeat orders for the same parts multiple times in a year, consider establishing a long-term contract with your manufacturing partner. Not all shops provide contract manufacturing services, but those that do are almost always open to discussing this option with customers. That’s because long-term contracts benefit buyers and precision machine shops alike. 

Buyers benefit from better pricing, greater flexibility, and unbeatable consistency, while shops benefit from operational efficiency and the ability to predict their cash flow months in advance. 

3 Benefits of a Long-Term Manufacturing Contract 

Let’s say you need 100 parts for the year, but you want to spread that out into four deliveries of 25 parts, each spaced three months apart. Simply communicate this request to your precision machine shop and reap the benefits of a long-term contract. 

1. Better pricing

The higher the quantity of parts you order, the lower the price per part. The shop has better purchasing power with material and plating vendors and can pass the cost savings on to you. More importantly, programming and setup—which can be time-consuming and costly—need only to occur once, and the cost is spread across many parts. 

Think about it: if you have a complex part that requires three hours of programming and four hours of setup, totaling $700, and you only order one part, you're looking at an astronomically high price per part. Spread that cost across 10 parts, and your price per part decreases to $70. Now, spread that cost across 100 parts; your price per part is only $7. 

Even in cases where the savings associated with programming and setup are minor—like if you're adjusting an order from 50 to 100 parts—many precision machine shops will be willing to reduce costs even further to account for the financial certainty they gain.

2. Greater flexibility 

When you enter a long-term contract, the precision machine shop machines the entire order at once, ships you the parts you need immediately, and stores the rest of the inventory on their shelves. That means if you suddenly need your second delivery of 25 parts a month sooner than initially planned, the shop can easily accommodate your request. You get the flexibility you need without having to worry about placing costly rush orders. 

3. Unbeatable consistency 

There are many variables in the manufacturing process—from machining to plating—and the more those variables are reduced, the better the consistency is from part to part, from order to order. Even two different batches of parts that both meet print specifications will inevitably exhibit some variability, which can cause problems for buyers, especially when those parts go into complex assemblies. 

When a precision machine shop has the opportunity to make 100 parts in one batch instead of 25 parts in four batches, buyers enjoy unbeatable consistency.  

Is a Long-Term Contract the Right Fit for You? 

It’s important to note that not all parts are suitable candidates for contract manufacturing services. If you can check these boxes, you could benefit from a long-term contract: 

1. You authorize the shop to machine all the parts at once. 

Machining all the parts at once is what allows shops to offer reduced pricing. The shop then holds the inventory on their shelves and ships the parts to you on a predetermined schedule. 

2. You don’t anticipate revision changes. 

Because shops must machine all the parts at once, long-term contracts are ideal for established parts and aren’t a good fit for parts in early engineering that may undergo revision changes.

3. You need a high quantity of parts. 

The beauty of a long-term contract is that it’s mutually beneficial for both parties: buyers and shops. When the quantity of parts is too low, a shop doesn’t benefit much from the agreement. We can’t speak for all shops, but at Focused on Machining, we typically look for orders totaling a minimum of 100 parts over a year. 

Start a Conversation about Contract Manufacturing Services

If you’re interested in discussing contract manufacturing services, let us know when you request a quote. It could be as simple as telling us, “I’d like to order 100 parts, but I’ll need them over six months.” We’re always willing to discuss the options with you and come to an agreement that makes everyone happy.