Contract manufacturing is an arrangement in which a company outsources production of its parts or products to another manufacturer, which builds them to the customer's designs and specifications. In machining, contract manufacturing usually means an OEM relies on a CNC machine shop to produce components on an ongoing basis instead of machining them in-house.
For many OEMs, contract machining lets them avoid buying and staffing machine tools, while still controlling their designs and quality requirements. This page explains how contract manufacturing works for machined parts, how it differs from a one-off job shop order, and how to evaluate a contract machining supplier.
How contract manufacturing works for machined parts
The OEM supplies drawings, specifications, and quality requirements. The contract manufacturer plans the manufacturing process, buys material, machines the parts, manages outside processing, inspects, and delivers on an agreed schedule. The relationship is typically ongoing, with repeat part numbers, forecasts, and scheduled releases.
- Design ownership stays with the OEM.
- Process ownership sits with the contract manufacturer.
- Quality requirements are defined by the OEM and verified by the supplier.
- Schedule is set by purchase orders, blanket orders, or forecasts.
Contract manufacturing vs job shop vs in-house machining
| Factor | In-house machining | Job shop order | Contract manufacturing |
|---|---|---|---|
| Capital investment | OEM buys machines | None for OEM | None for OEM |
| Relationship | Internal | Order by order | Ongoing, repeat parts |
| Planning | OEM | Per order | Forecasts and blanket releases |
| Supply chain management | OEM | Limited | Supplier manages material and outside processing |
| Documentation | Internal | As ordered | Standardized per part number |
Benefits of contract machining
- No capital spent on machine tools, CMMs, or tooling.
- Access to process types the OEM does not run, such as Swiss turning or horizontal milling.
- Capacity that scales from prototype to production.
- Material and outside processing managed by the supplier.
- Consistent documentation for each part number and release.
What to look for in a contract manufacturer
Equipment that fits your part family
Review the equipment list against your parts. A mix of CNC lathes with live tooling, horizontal machining centers, and Swiss-type machines covers most turned and prismatic components. See Wexmar's machine list.
Quality system and inspection
Ask for the quality system basis, the inspection equipment, and sample reports. CMM data and FAI capability matter for production programs.
Capacity and scheduling
Ask about second-shift capacity, unattended running, and how the shop handles forecast changes and pull-ins.
Supply chain management
A contract manufacturer should buy material to specification with certs and traceability, and manage outside processors for heat treat and finishing.
Direct relationship
Working with the shop directly, rather than through a marketplace, gives you one accountable party for quality and delivery.
How pricing works in contract manufacturing
Contract machining pricing is usually quoted per part number at agreed quantity levels. Annual volume and release size both matter: a large annual volume released in small monthly lots still carries a setup on each release unless the shop runs a larger batch and holds stock. Buyers and suppliers often agree on a batch size that balances setup cost against inventory. Material price changes, particularly for nickel alloys and stainless, can be handled through periodic re-quotes. Clear forecasts help the supplier buy material in efficient quantities and plan machine time, which supports both price and delivery. When a part is new to the supplier, expect a first article on the first release before the part settles into routine production. Programs and fixtures made for a part number are usually retained by the shop for repeat releases.
Contract machining at Wexmar
Wexmar is a precision CNC machine shop in Canastota, NY, that serves OEMs as a contract machining supplier. Turning, horizontal milling, Swiss machining, and inspection are on one floor, with second-shift capacity and lights-out capability on Swiss work. Heat treat, plating, and other finishing go through qualified outside processors and are managed as part of the order. Material certs, heat-lot traceability, CMM reports, and FAI in AS9102 format are available. The quality system is aligned to ISO 9001:2015. Read more on our about and industries pages.
Contract manufacturing checklist
- Part family and annual volumes defined.
- Drawings and specifications current.
- Quality and documentation requirements agreed per part number.
- Forecast and release method agreed.
- Outside processing specifications defined.
Getting a quote
To evaluate Wexmar as a contract machining supplier, send a representative part or a package of part numbers with annual volumes. You can upload a drawing for an instant estimate or call (315) 400-2654.