Many firms, especially those that focus on design and problem-solving, sub-contract the manufacture, and maybe other functions as well, to specialist contract manufacturers.
Contract manufacturing
General business
Trade & investment
4 years ago
743
A contract manufacturer (“CM”) is a manufacturer that enters into a contract with a firm to manufacture or assemble products for that firm.
A contract manufacturer (“CM”) is a manufacturer that enters into a contract with a firm to manufacture or assemble products for that firm. It is a form of outsourcing. In a contract manufacturing business model, the hiring firm approaches the contract manufacturer with a design or formula. The contract manufacturer quotes based on processes, labour, tooling and material costs. Typically, a hiring firm will request quotes from multiple CMs. The hiring firm will select a manufacturer and then, for the agreed price, the CM acts as the hiring firm’s factory, producing and shipping units on behalf of the hiring firm.