Contract manufacturing services involve outsourcing a company’s manufacturing process to a subcontractor. Types include electronic, pharmaceutical, and medical contract manufacturing. Contract manufacturing agencies can help companies find the right subcontractor. The design and ownership of the product still reside with the original company.
Contract manufacturing services refer to the outsourcing of part or all of a company’s actual manufacturing process to a subcontractor. The different types of contract manufacturing services include electronic manufacturer services, pharmaceutical manufacturing services, medical contract manufacturing, and contract manufacturing agencies. Companies interested in outsourcing some of their activities can contact the subcontractor directly or apply to an agency.
Electronic manufacturing services are commonly outsourced from the original equipment manufacturer (OEM). An OEM is the company that originally designed and manufactured a specific product. As the business grows, the manufacturing component of the business may take a backseat to marketing or R&D. With more emphasis on core areas of the business, a company can recognize that a contract manufacturer can build the product at a lower cost than it would cost to make it in-house.
Contract manufacturing services in the electronics industry are widespread and range from PCB design to end-of-life management. An OEM may choose to only outsource the manufacturing of the specific product or employ the additional services of various subcontractors to assist in distribution or logistics to get the product to the final consumer. Regardless of the types of contract manufacturing services the OEM chooses to use, the design and ownership of the product still resides with the OEM and not the subcontractor.
Pharmaceutical manufacturing services are another area of contract manufacturing. The most common practice in this industry is to have the actual manufacturing of the drug provided by a subcontractor while research and development is solely with the original pharmaceutical company. Other contract manufacturing services in the pharmaceutical industry include warehousing, distribution, packaging, and quality control audits.
Medical contract manufacturing is a combination of electronic and pharmaceutical contract manufacturing. The manufactured products are medical devices which may include electronic components. Some medical manufacturing contracts involve the supply of medicine dispensers such as an electronic insulin pump. When a company subcontracts the medical device, it may also require the subcontractor to coordinate with other pharmaceutical contract manufacturers to provide complete distribution of both the device and pharmaceuticals to the end customer.
For companies new to outsourcing, contract manufacturing agencies are helpful in finding the right subcontractor to work with. The agency will meet with the company to understand what level of outsourcing it needs and the types of services required. The agency will then research, interview and narrow down the list of possible subcontractors who can meet the company’s requests. The company can then simply choose from the list of candidates.
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