Turnkey Contract Manufacturing: What Does It Cover?

If you’ve done just a little bit of research about third party manufacturing, you’ve probably heard of turnkey contract manufacturing. At Conversion Technologies International, we consider ourselves pretty familiar with it—let’s explore what this option covers, and what it could mean for you.

What is the difference between turnkey and contract manufacturing?

The biggest difference between turnkey manufacturing and contract manufacturing is the degree of processes and details covered. In short, turnkey manufacturing is more comprehensive than contract manufacturing. When you turn to a third party for contract manufacturing, you’re really focusing on the production—in some cases one specific part of production. You’re paying a fee, and in exchange the contract manufacturer handles the task for you.

Some business owners in pursuit of this type of manufacturing prefer toll manufacturing. This functions similarly to contract manufacturing, but instead allows the client to provide the raw materials. You may choose an option like this because you have a materials provider you like; perhaps they’ll make the overall process more affordable. Contract manufacturing, in contrast, covers materials as well.

Consider turnkey contract manufacturing the next step up, in a sense. It covers every part of the manufacturing process, not just the physical production. It begins with design and also covers engineering. While you’ll approach a contract manufacturer with a design in hand, you’ll start with a turnkey manufacturer much sooner. All you need is your initial concept—the turnkey manufacturer can take the project on that early. They’ll walk you through product development, taking your concept and making it into something fully-formed and ready for production.

While this doesn’t at all mean you aren’t involved, it’s sometimes easier for less experienced business owners to work with turnkey manufacturers. All of your requirements will be met by a turnkey manufacturer, but you don’t have to worry about the finer details of how to make them a reality. Essentially, you’re letting the experts do more of the work, while still getting the final product you envisioned. It’s no wonder turnkey has become so favored in recent years.

What is “turnkey” in turnkey contract manufacturing?

So many different types of manufacturing can fall under the “turnkey” umbrella. A turnkey manufacturer offers full service, but they don’t necessarily work with every possible client on the market. Some specialize in different spaces, whereas others handle broader services.

Some of the most typical types of turnkey manufacturing projects include:

—Commercial. These projects tend to be on a larger scale. They may even involve building production, constructing massive structures from the ground up. You’ll typically see them cover products within the retail space, wherein the primary goal is making a profit and scaling quickly. It’s incredibly important for commercial projects to function quickly and efficiently. You won’t typically have a lot of time for experimentation, or for that matter trial and error. Most businesses work within commercial sectors, and if you want speedy, consistent production, turnkey manufacturing may be the best possible option.

—Industrial. An industrial project typically has to adhere to different (and sometimes stricter) regulations than those you would see in more commercial spaces. Conversely, the product’s appearance may be more utilitarian. Many turnkey contract manufacturing experts offer industrial services.

—Residential. Yes, it’s true—some turnkey contract manufacturers go so far as to handle the construction of residential buildings. Whether you’re handling a project of this scale or something smaller and less complex, you can’t afford any mistakes. These are the types of products that consumers see up close and personal. It’s incredibly important for your work to reflect your high standards, even when you outsource to a turnkey contract manufacturing company.

What is an example of a turnkey contract?

The specifics of every turnkey contract depend on factors like the company, the client, and the industry—among other things. Generally, you can expect the contract to cover all inclusions, and any specific custom parameters set by the client. Additionally, there may or may not be clauses covering opt-outs, as well as penalties for either party if you break the contract. For example, if you as the client choose to break the contract after a certain period of time, you may expect to pay a fee.

But remember: Nothing is set in stone until you both agree to and finalize the contract. You can and should ask questions if any come to mind. A reliable manufacturer will not only prepare to answer them, but expect them.

Many turnkey contracts cover aspects like:

• Design
• Materials
• Procurement
• Engineering
• Production
• Equipment
• Final handover

Get Informed Now

The best way to approach any contract is to know what you’re getting into—and what you want—well ahead of time. To learn more about turnkey contracts and to decide whether the turnkey approach is right for you, we recommend contacting CTI here or calling us at 419-924-5566. We’ll help you learn everything there is to know about this exciting approach. Similarly, we offer toll and contract manufacturing services. So, if that seems like the better fit for you, we’d be glad to help!