With over 1 billion drivers in the world, the automotive industry is constantly creating new products to keep up with the ever growing demand for vehicles. The high demand to keep up with competitors requires automakers to outsource products requiring assembled components to specific contract assembly house companies.
How Does a Contract Assembly House Work Within the Automotive Industry?
Outsourcing Contract Assembly
Automakers tend to do final assembly of larger components such as cockpits, seating, and front-end modules, although OEMs regularly outsource many smaller components such as electro-mechanical switches, buttons, and light cover housings, for example. OEMS receiving pre-assembled components on time ultimately lowers working costs with efficient material handling and inventory control.
An area where outsourcing has continually made sense for the automotive industry is in safety, such as airbags and seat belts. The reason that automakers outsource these types of services is due to the contract assembly house specializations, experience, and expertise in cost-efficient assembly. These items are assembled and shipped ready for automotive OEMs to install.
By outsourcing contract assembly to an experienced assembly house, automotive manufacturers can focus on their higher-level product manufacturing and assembly. Outsourcing specific products to assembly providers allows OEMs to specialize and concentrate on higher level product offerings. The use of contract assembly allows for more resources directed to design, engineering and development departments for continual improvement of vehicle manufacturing processes.
Automakers that outsource smaller part assemblies realize many benefits such as reducing working capital requirements and lowering operating costs. By partnering with a quality focused contract assembly house, OEMs maintain their level of quality and timely deliveries. The right contract assembly company will provide a mutually beneficial relationship with OEMs where both experience growth in sales and profitability.
Peoria Production Shop offers a diversified range of services such as various sewing capabilities that allow us to use our resources to provide safety measures for the automotive industry. An example of our diverse services is the opportunity that PPS has had to create bus dividers amid the coronavirus pandemic. We are proud to have the capabilities to provide safe and useful features for transportation.
We differ from other assembly houses in our diverse range of services and ability to adapt to your specific needs. Furthermore, PPS can do multi-step assembly processes which could be used to develop products for axle and suspension models. PPS focuses on jobs not profit, therefore we strive to lower overall assembly costs for original manufacturers.
Overall Return on Investment
One study finds that tier-two and tier-three system suppliers contribute more to the overall value of a vehicle than the original manufacturer does. Partnering with an ISO9001:2015 registered company reduces risk in OEMs outsourcing assembly, giving them an advantage over competitors with valuable partners in their supply chain helping to reduce costs.
The automotive industry is continuing to grow with more and more drivers on the roads. Automotive manufacturers need to wisely utilize all resources to keep up with continued growth. Carmakers who choose to outsource the right assemblies and focus on the most profitable aspects of their automobile assembly will remain competitive and profitable with more flexibility.
Peoria Production Shop has been a valued supplier to OEMs in the automotive industry with vast experience in lean contract assembly. We follow a strict quality policy as part of our ISO9001:2015 registration and a commitment to delivering quality product, on-time at the most economical cost available. Contact us to learn how to improve your supply chain with an experienced automotive contract assembly house.