Why You Should Establish a Long-Term Agreement With Your Contract Manufacturing Partner
When you’re ready to scale production, you need a reliable manufacturing partner who always gets the job done right and delivers on their promises. But issues arise when other companies are looking for the exact same thing, as reliable contract manufacturing services are often in high demand. That’s why, when you find a contract manufacturing partner that you like to work with, it's often beneficial to enter into a long-term agreement (LTA) with them and establish the requirements, production volumes, and fulfillment timelines for each of the parts you need.
Beyond creating a more formal and official relationship, long-term agreements have many benefits, most notably that they create the opportunity for efficient production planning. This often results in lower per-part costs, decreased indirect labor inputs, and reduced supply chain risks. In addition to these very immediate and tangible benefits, long-term agreements also help forge a strong relationship between your company and your manufacturing partner, which can benefit you both in many ways for years to come.
At Athena Manufacturing, we have decades of experience establishing long-term agreements with our customers that benefit both parties. In fact, eight of our 10 largest customers — which include OEMs in the aerospace, electronics, and energy industries — have long-term agreements with Athena. We think that says a lot about the quality and service we provide, as well as the benefits of entering into a long-term agreement with Athena for your precision CNC machining and sheet metal fabrication needs.
The Advantages of Long-Term Agreements for Contract Manufacturing Services
There are many reasons to enter into a long-term agreement with your contract manufacturing partner. While LTAs might not have been as necessary in the age when a handshake deal was good enough, businesses have become more complex since then. Now, long-term agreements offer assurances and greater predictability in the rapidly changing manufacturing landscape.
While not all of our customers find that a long-term agreement is right for their needs, there are some key benefits you’ll realize when you enter into a long-term agreement with Athena Manufacturing.
Higher-Quality Parts
We strive to manufacture the highest quality parts for all of our customers, whether or not they have a long-term agreement with us. However, long-term agreements provide demand predictability and production volume, allowing us to make customer-specific investments in various tools, technologies, processes, and materials that often result in higher-quality parts.
In addition, in precision machining and manufacturing, one thing is certain: when we repeatedly manufacture a specific part, we learn from experience and find ways to improve the manufacturing process. Naturally, this results in higher-quality, more efficiently manufactured parts, which in turn leads to our next benefit — lower per-part prices.
Lower Per-Part Prices
Being able to predict a specific part’s future demand allows us to find ways to reduce manufacturing and material costs. In turn, we’re often able to pass those savings on to you with lower per-part prices.
Fewer Indirect Labor Costs
Outside of quality and direct costs, with a long-term agreement, your indirect labor — the amount of work that goes into manufacturing that’s not directly tied to production — can be significantly reduced. By entering into a long-term agreement with a contract manufacturing partner like Athena Manufacturing, you’ll save lots of time you’d otherwise spend submitting RFQs, entering purchase orders, negotiating prices, and onboarding new suppliers, as all of this is established and agreed upon in advance.
Additionally, when you need more parts, you won’t even have to place an order — your standing order will be delivered on schedule, as agreed upon, every time. This can add up to significant time and cost savings, especially if you expand your relationship by entering into LTAs for multiple parts.
Reduced Supply Chain Risk
Long-term agreements with your contract manufacturing partner have many benefits, but perhaps none greater than mitigating supply chain risks. When you enter into an LTA with Athena Manufacturing, we’re both doing the hard work upfront of planning ahead — you’re promising to order a specific number of parts within a set timeframe, and we’re promising to manufacture and deliver those parts on schedule. As such, this agreement allows us to secure materials and guarantee capacity in advance, ensuring that you’re unlikely to ever experience a shortage of the parts you need. And if demand increases and you need more parts on a short timeline, you’ll already have an established relationship with a manufacturing partner that understands your requirements and is able to meet your needs.
Establishing a Long-Term Agreement With Athena Manufacturing
Whether you’re looking for precision machining services or sheet metal fabrication, entering into a long-term agreement with Athena Manufacturing has many benefits. Not only will we be better equipped to serve you by optimizing manufacturing processes to meet your needs, but you’ll also reap the benefits of lower per-part prices, fewer indirect labor costs, and reduced risk within your supply chain. However, the greatest benefit of a long-term agreement is the strong relationship it forms between your business and ours, where we can leverage our vast network of suppliers to help you achieve your manufacturing goals, even during supply chain disruptions.
At Athena Manufacturing, we aim to provide our customers with comprehensive contract manufacturing services for all of their precision CNC machining and custom metal fabrication needs. As a mature and stable contract manufacturer, we’ve been working with companies of all sizes — including large OEMs — for over two decades, partnering together to create long-term agreements and min/max programs that offer greater predictability and cost savings for both parties. When you enter into a long-term agreement with Athena Manufacturing, you’re getting more than just quality parts at an even better price, but a contract manufacturing partner that recognizes the level of trust that a long-term agreement demonstrates and the value of the relationship we’re building that will benefit us both for years to come.
If you want to learn more about what a long-term agreement with Athena Manufacturing could mean for your business, contact us today to speak with our team.