Contract manufacturing refers to the production of a product or component either in-house or at a third-party site. The product can be a container, appliance, machine or other manufactured item. Most commonly, companies outsource contracted product development and manufacture. However, in order to become a contractor, you must have a manufacturing center that can produce the requested product. In the past, many companies in the US alone had manufacturing capabilities.
Contract manufacturers are an outsourcing company that contracts with another company for raw materials or components. It's sort of an offshoot of offshoring. Basically, a contract manufacturer doing packaging operations at a third-party site is known as a contract packer or copasser. Contract manufacturers normally have very limited resources to tap into in the way of processing capabilities. In order to increase their available capacity, many contract manufacturers outsource to third-party contract manufacturers.
Outsourcing increases a contract manufacturer's overall ability to do business given that resources are concentrated in the core business of producing products. Contract manufacturers who outsource also increase their capability to gain access to international markets. This is due to the fact that the majority of the time they do not have their own assembly plants. Rather, they hire a third party manufacturer to do the initial production process for them. So how does outsourcing benefit a small company?
For one thing, it allows a company the opportunity to focus on the most important aspects of their operation - quality control, product testing, and manufacturing management. Quality control is especially important if you plan on distributing your goods overseas. Without the capacity to guarantee quality at every step of the supply chain, you could be taking a huge risk on the goods you send to your customers overseas. Many contract manufacturers will perform quality control checks during the manufacturing phase. With an outsourcing company, you can focus on other important factors like testing and approving product samples.
Contract manufacturing involves a number of different types of contract manufacturers from which you can choose. These manufacturers typically focus on producing a range of different types of products. Each type of product has different characteristics so it can benefit a company in different ways. There are contract manufacturers that deal with plastics, rubber, printed circuit boards, paper products, electronic parts and even medical devices. The manufacturers you choose should be able to provide a comprehensive list of the types of products they currently provide to clients.
One thing you must remember when contracting with contract manufacturers is that they are probably not going to provide all the answers you are looking for. Make sure you discuss the types of products that you want and the needs of your business before making a decision. Take a look at the company's track record in the contract manufacturing industry. You should also read through the manufacturer's website so you have an idea of what types of products they have available and how they can best serve your business. If you are confident in their ability to meet your needs, then you can go ahead and make a decision.