Contract manufacturing services are provided by one company to another when the client company wishes to outsource all or part of its production of one or more items. There are many of industries that take advantage of contract manufacturing; these include the electronics sector, pharmaceuticals, nutraceuticals, vitamins, medical supplies, and many more. Potential clients of these subcontractors can often locate them though agencies that represent them or direct.
Electronic components are often outsourced to contract manufacturers. In many cases the original equipment manufacturer outgrows its own ability to manufacture in sufficient quantity to satisfy the ever-growing customer base and associated product volume. When this happens manufacturing is usually relegated to a secondary role within the corporation and the focus becomes R&D and marketing. When the emphasis changes from what the company cannot do profitably to what it does best, the company becomes more profitable and less prone to problems.
The beauty of using Contract Manufacturing Services is that the client can outsource as little or as much as it finds feasible. In certain instances the client company can even rely on contractors to get the product from the manufacturer to the customer. It makes no difference what services the OEM chooses to use, the product design and any patents remain the property of the OEM and do not revert to the manufacturer.
Another area where contract manufacturing is very prevalent is the pharmaceutical industry. The common approach is to outsource the manufacture of the drug while the client continues to focus on detailed research and testing, which can take years. As well as pharmaceutical product manufacturing, it is common that the contractors take control of packaging, QC, warehousing and distribution.
The distributors of vitamin and nutritional supplements also use contract manufacturing. In this case the products are somewhat common in their makeup and many companies simply purchase a standing product under a private label arrangement. This method of marketing virtually eliminates any costs associated with production, including product development.
Not only are pharmaceuticals manufactured under contract, so are medical devices such as insulin pumps and other medicine dispensers. These devices are usually a combination of pharmaceutical technology and electronics. This combination of components and skills often means the subcontractor has to coordinate with other subcontractors to effectively fill the order.
