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Managing Increasingly Complex Global Manufacturing Contracts

     

There have been drastic changes in the manufacturing sector over the last few decades. In fact, it is pretty clear that the manufacturing process itself has become a global activity.

In the past, goods were often sourced, produced, and exported from one country to another. Nowadays, more countries are able to source parts fairly cheaply and then assemble them elsewhere at a reduced cost due to the supply of inexpensive labor. However, global manufacturing does make the process more complicated.

 

Adding steps to the manufacturing chain will result in the negotiation and execution of manufacturing contracts with parties located in various geographic regions. Because there may be some contracts to juggle simultaneously, as well as different jurisdictions and laws to consider, it is important for companies engaged in any facet of manufacturing to use a contract management service. The implementation of an online contract management system can facilitate the following aspects of the manufacturing process: 

 

 

Component Sourcing

 In order to construct a particular product, the manufacturing plant tasked with creating it must first obtain the components used to make it. This may require sourcing from one, several, or many companies scattered across the globe. The company creating the product may take care of component sourcing, or the manufacturing plant may handle finding all of the parts on its own.

 Regardless of who is locating the parts, what is being ordered, or where it is coming from, component sourcing requires careful research and constant supervision to ensure quality products are delivered in a timely fashion. Fortunately, contract management systems can help contract managers monitor important milestones, such as component delivery dates and renewal discounts.

Assembly

In general, the assembly must be done correctly albeit quickly to ensure quality output and effective production. Contracts that address product assembly will likely include terms related to the number of items to be produced, the timeframe during which they will be manufactured and delivered, and recourse for any product defects, among other conditions. A contract management service can be used to tag and highlight this sort of information to help managers monitor contract compliance, and alerts can be created so they stay on top of the assembly timeline.

Packaging and Shipping

Because manufacturing occurs on a global scale, items may have to cross multiple borders before they become incorporated into the final product or reach their final destination. Components and goods may have to be configured in a certain way in order to clear customs or comply with the laws of the importing country. Given the diversity and breadth of potential regulations, these details should be hammered out in the governing contract.

 

Obviously, trying to keep up with the particulars of every contract would prove unfeasible, but using contract management software can be of tremendous help because it facilitates organization and enables quick, efficient searching.

 

Regardless of whether a company participates in one specific element of manufacturing or multiple, distinct parts, time is usually of the essence. There may be a variety of contract management solutions available, but product managers should look for an affordable, easy to use service that offers useful features with minimal setup time and training needed. 

 

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