Contract manufacturing and toll manufacturing are ways of doing business for many companies, large and small. What are they exactly and how do they differ?
There are many paths to manufacturing success. Some companies start from scratch and produce their products in-house from day one.
Others produce some aspects of their goods while buying partially processed materials or sub-assemblies from others.
And there are some who manufacture their entire product lines using another company’s facilities either as a transition to in-house production or as an element of their core business model.
In the case of the latter, those who manufacture their products through other entities are doing so using contract manufacturing.
In contract manufacturing, a company will initiate a contract between themselves and a manufacturer to produce a certain number of products for the parent company for a period.
Also called private manufacturing or white label manufacturing, you can see this type of arrangement in many industries.
One example is in food production where name-brand food labels produce their own product line while using the same equipment and often the same raw materials to leverage excess capacity to produce private label foodstuffs for local grocery chains, who often sell the in-store and name-brand on shelves side by side.
You can also read about this from here: manufacturing-software-blog.m...
Timecode:
0:00 Introduction
1:31 Why companies use contract manufacturing
3:12 Contract Manufacturing Risks
4:35 Toll manufacturing
6:26 Contract manufacturing with ERP/MRP
8:08 Conclusion
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9 июл 2024
