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What is Contract Manufacturing?

ValQ
January 5, 2022

Contract Manufacturing is a business model in which a firm hires another firm to produce components, assemblies, or the final products. It is a form of outsourcing where a contract manufacturer enters into a business agreement with another company for manufacturing the requirements over a specific period.

Contract Manufacturing enables numerous small businesses to sell their products without investing capital for running a factory. Companies can dream up just about anything, have it manufactured easily, and start selling it to the masses with the help of contract manufacturers.

Choosing to partner with a trusted contract manufacturer provides a wide range of benefits for an organization like cost savings, scaled-up production, bolstered quality control, risk mitigation, and efficient management of resources. Contract manufacturers allow companies to focus on growing their business without allocating time and resources to logistics and other day-to-day aspects of manufacturing.

Below are some of the crucial characteristics to consider before selecting a contract manufacturer,

  1. Capabilities
  2. Equipment
  3. Experience
  4. Capacity
  5. Personnel
  6. Quality Standards

Try out the free demo for Contract Manufacturing Analysis using Microsoft Power BI here.

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