• Introduction
• Understanding Turnkey Manufacturing
• What is the Turnkey Manufacturing Process?
• Benefits of Turnkey Manufacturing
• Limitations of Turnkey Manufacturing
• Choosing the Right Manufacturer is Crucial
• Conclusion
• About Komaspec

In-house manufacturing is an expensive and labor-intensive way for businesses to make products. One popular alternative that businesses have used for a long time is contract manufacturing. This is when separate aspects of sourcing and manufacturing are outsourced to various external contractors. Using the contract manufacturing method is useful, and it’s often relatively successful. However, it can often create a number of complex responsibilities. This is especially true for businesses with global supply and manufacturing networks. Businesses have to handle issues such as design and documentation, supply chain coordination and material procurement if they follow this method. Handling these responsibilities can lead to increased engineering budgets, extended project timelines, quality issues due to miscommunication and various other challenges.

One solution that has gained increased popularity among businesses for being far more efficient is turnkey manufacturing.

While it’s still a form of contract manufacturing, turnkey manufacturing goes much further than standard contract manufacturing. It is an approach to production outsourcing that provides a complete end-to-end, hassle-free solution for the customer. With this method, businesses outsource their entire manufacturing process to a single contractor instead of managing the process through several contractors or themselves. Everything, right from design hand-off to delivery, is given to a single contractor with turnkey manufacturing. This means one contact window, one responsible supplier, one invoice or bill and a great reduction in complexity. In this article, we will delve into the turnkey contract manufacturing model, looking at how it works and what the benefits and limitations are.

We will also look at the importance of selecting the right turnkey manufacturing solutions provider when following this approach. With the manufacturer handling such extensive responsibilities, it’s important to make sure you choose the right turnkey manufacturing partner if you choose to pursue this method.

Also known as end-to-end manufacturing, turnkey manufacturing is a production model in which a company outsources their entire production process to a specialist manufacturer.

The term "turnkey" originates from the idea that an end user only has to perform an action as simple as "turning a key". When it’s used in a manufacturing context, it implies that a supplier will deliver a product that is ready for immediate use, involving no effort from the ordering business in the production or delivery process. 

An example of a turnkey service is a food delivery service. Customers are not involved in ingredient procurement, cooking, or transporting the food to their location. They simply order, and the company delivers the food to their doorstep. This process constitutes a turnkey service, and the idea is the same in product manufacturing. Another example of a turnkey product is a fully furnished house that’s for sale. A customer only needs to pay and move in.

Fig. 1: Turnkey Manufacturing Process

In turnkey manufacturing, the manufacturer is responsible for almost all aspects of the production process. Generally, they start from the handoff of a product design and handle everything from development and commercialization through to material procurement, manufacturing, assembly, testing and final delivery. Typically, the client presents the manufacturer with a mature product or a ready design, and the manufacturer is responsible for making everything happen from there on. This approach provides businesses with a single point of contact, greatly simplifying communication and ensuring a smooth, efficient and hands-off production cycle.

The turnkey approach offers significant benefits over contract manufacturing. Managing contract manufacturing can increase lead times and communication costs for a business if it isn’t properly prepared to start the process. There’s also the risk of encountering complexity in managing supply chains and poor quality and inventory management if the right partners aren’t identified.

Turnkey manufacturing provides the benefits of contract manufacturing, such as streamlined processes, additional labor and technical resources. However, this is without the complexities associated with managing or overseeing day-to-day operations when using less integrated or capable contract manufacturers.

Turnkey manufacturing processes vary according to the product. They also involve a mix and match of various steps, depending on the level of manufacturer involvement and capabilities, and when that “handover” takes place.

All turnkey projects, however, typically involve the following broadly defined steps:

Product Design and Conceptualization

The turnkey manufacturer will collaborate with their client to finalize the product design, taking into account its utility, specifications, functionality and target market. The client may have a ready-made design of the product, orit may be on the market already. In any case, the manufacturer is responsible for the optimization of design for manufacturing (DFM). They should focus on reviewing design feasibility, which is whether the product can be made as designed. As well as this, they should also focus on design optimization for lower production cost, better product quality and faster/easier manufacturing and related processes. DFM also involves discussions about material selection, product requirements and testing and other aspects of the product and process definition.

Prototyping and Testing

After finalizing the design and obtaining the client's approval, the manufacturer will build prototypes, employing rapid prototyping, custom manufacturing and pilot production techniques. Using the prototypes, designers and developers will validate and test the product, iterate on designs and gather feedback from stakeholders. This is an important stage to complete before moving forward with full-scale production. This iterative process helps identify and resolve issues early on. At this stage, the manufacturer can also confirm that the product conforms to relevant standards.

Depending on the product and the customer's requirements, turnkey contract manufacturing may involve new product introduction services, such as product documentation and concept validation.

Fig. 2: Komaspec's Turnkey Manufacturing Facility

Sourcing and Procurement

After the prototypes pass through the testing stage, the manufacturer will source and procure the required raw materials, components or parts from trusted suppliers. They will leverage their network and expertise to secure quality materials at competitive prices. This saves the customer the complex task of managing the full supply chain, though they may be involved in designating suppliers or consigning parts for crucial components.

Manufacturing and Assembly

The actual manufacturing and assembly of the product occurs at the next stage. Depending on the product, the turnkey manufacturer may manufacture it using in-house facilities or order parts from specialized suppliers and assemble it in-house. The latter method is a type of contract assembly. The customer is not directly involved in either case, and it's up to the manufacturer to ensure that all stakeholders adhere to the customer's timeline and product specifications. This stage involves everything from fabrication and assembly to postprocessing, with the finished product being the outcome.

Quality Control and Testing

The manufacturer should implement quality control measures at various points during the manufacturing and assembly process based upon known best practices or discussion with the customer. This helps to identify and rectify any defects or issues before products reach the market. Generally, this will involve incoming quality control (IQC), process quality control (PQC), and outgoing quality control (OQC) measures.

Packaging and Shipping

Lastly, the turnkey manufacturer packages the finished product according to the client's specifications and manages the logistics of ensuring timely delivery to the client or end-users. Depending on the customer’s needs, this may involve container shipments, drop shipments via express couriers or even air freight.

Turnkey manufacturing is the preferred manufacturing model for countless businesses. In fact, most of the world's biggest brands use turnkey manufacturers to produce their products. This widespread popularity is a result of the production model's many inherent benefits.

Some of the main benefits are as follows:

• Seamless, hassle-free manufacturing: Running a successful business means taking care of a wide range of critical matters. In addition to having a great product, a company needs to handle marketing, sales, customer satisfaction, personnel management and more. Turnkey manufacturing enables businesses to outsource one of the most difficult aspects of their entire operation: manufacturing. It isn’t always essential for a company to be involved in production, as it is with other aspects of business, like customer care or marketing. As well as this, it also frees up time, resources, and staffing to focus on other aspects of the business. With a single point of contact managing the entire process, there is also less chance of miscommunication or coordination issues, reducing the risk of delays or errors.
• High-quality products: Where businesses can find a reliable, expert turnkey manufacturing solutions provider, they significantly minimize the possibility of having a weak link in their operations. This is because they will have one reliable expert instead of multiple contractors.

Specialized turnkey manufacturers will typically have dedicated facilities and equipment that ensure higher product quality. They will have a larger, experienced quality team and supply base. With a larger purchasing buy, they will have good access to quality suppliers and receive better service, pricing and lead times. One very important advantage for customer of turnkey manufacturers is that there is only one supplier responsible for all production and quality control -  the responsible party for any quality issues is clear. When there are multiple suppliers involved, tracking down the root cause ofan issue is originating from becomes much more time consuming and complex. 

• Faster time to market: The turnkey manufacturing model tremendously reduces product development timelines. To begin with, because the entire production process takes place "under one roof," progression between stages is streamlined. The in-house experts in charge of the different stages of production work together from the beginning. This allows for better planning and timely problem identification, and each expert or team also spends less time getting up to speed when it gets to their stage. For example, if a post-processing expert is involved at the design stage, they can point out any potential issues that may arise in post-processing long before the product gets to that stage. This will significantly increase development speed. Experts in each stage can quickly consult, make adjustments and exchange feedback with those in the preceding and subsequent stages. Having a turnkey manufacturer also saves businesses the time and stress of supply chain management, delays in transit and the difficulty of organizing logistics protocols.
• Reduced production costs: Finding cost savings is an imperative consideration for businesses. With turnkey manufacturing, businesses can save money in numerous ways. The most significant saving is usually the capital expenses related to building and outfitting  a factory. The turnkey project model provides businesses with the benefits of having a dedicated manufacturing facility without the cost or risks involved.

Not running a factory allows businesses to scale up and down according to market demand flexibly and quickly. There are no direct personnel costs or upkeep.  

Reduced management costs - Turnkey manufacturing can help reduce costs by allowing for a single point of contact, a single supplier who is handling inventory, ordering, and all aspects, reducing the cost of project management, supplier management, cost of quality and other aspects by shifting these responsibilities to the manufacturer.

While turnkey manufacturing offers numerous advantages, it also comes with certain limitations and challenges. Businesses should be aware of these before opting for the turnkey approach.

Here are some downsides to turnkey manufacturing:

• Lack of control: When companies choose the turnkey project model, they relinquish control of the entire production process to the manufacturer. They may end up with limited oversight over the manufacturing process, making it difficult to intervene if issues arise or changes are needed. Another risk is the risk of compromising product quality if the turnkey manufacturer does not adhere to the desired QC standards.
• Requires a clear definition of requirements: Because businesses lack control over production when they use a turnkey manufacturer, it’s necessary to be very clear about what is required at the outset. Businesses need to state exactly what they need from their manufacture, so there is no ambiguity down the road. This includes a clear definition of product and manufacturing requirements as well as the manufacturers additional responsibilities. Defining requirements can be complicated and time-consuming.
• Dependency on the turnkey provider: Companies may become heavily reliant on the turnkey manufacturer for their production needs. This dependence can be a concern if the provider faces unexpected financial difficulties or operational issues in the future. Where issues arise unexpectedly, this can lead to disruptions in the supply chain and a lack of inventory.
• Cost and price transparency: Though turnkey manufacturing can lead to cost savings and often comes with a more transparent pricing structure than contract manufacturing, this isn’t always the case. A manufacturer may present the customer with a quote that is padded, bloated, or lacking in detail. Where pricing issues arise, they may cause losses for the customer.

Table 1: Comparative Overview of Turnkey Manufacturing: Benefits and Limitations

When you look at the limitations of turnkey contract manufacturing, it is clear that many of the risks associated with the approach stem from the possibility of the manufacturer being incompetent. Similarly, where this approach brings benefits, it will come from employing a proficient, experienced manufacturer.

Brands and other businesses need a turnkey manufacturer that can be trusted to exercise control and good judgement for  the various stages of production. An  experienced turnkey manufacturer will usually handle these things better than the company can themselves and will reliably provide high quality products at competitive prices. They will also be able to respond quickly to changing market conditions, enabling a business to capitalize on new opportunities. An incompetent manufacturer will be a liability and could produce sub-standard products or fail to keep up with demand. The manufacturer also need to be trusted over costs and prices, and they need to be reliable over the course of a long-term business partnership.

Selecting the right manufacturer is, therefore, critical to the success of your turnkey project.

Fig. 3: Product Manufacturing at Komaspec

Turnkey manufacturing has emerged as a game-changer in the manufacturing landscape, providing companies with a holistic and efficient solution for bringing products to market. By outsourcing the entire production process to specialist manufacturers, businesses can benefit from reduced costs, increased efficiency, faster time-to-market and higher product quality. As well as this, it gives them the opportunity to focus on their core competencies and other aspects of their business.

Komaspec is an industry-leading turnkey manufacturing solutions provider with a reputation for quality and reliability. We have over a hundred state-of-the-art machines spread across four manufacturing facilities, more than 20 engineering staff and wide-ranging application and process experience.  

With extensive complex mechanical and electromechanical product assembly experience and a high level of vertical integration (we handle  sheet metal, injection molding, welding, CNC machining, stamping and other services all in-house)and a full-service team of engineers and project professionals,  we offer turnkey services for small and medium-sized enterprises in a variety of sectors, including: mining, IOT, agritech, hard consumer goods, recreational vehicles and others.

Contact us and and one of our experienced sales engineers will reach out on how we can help you with your next project.