Know the Nature of Contract Manufacturing
The outsourcing or contracting out of manufacturing services of a business to another outside firm, business or third party vendor is called contract manufacturing. The manufacturing of the products to their required specifications, engineering the product or designing and manufacturing the product comprise the manufacturing services.
In a manufacturing business, the main line of activities cover inbound goods, manufacturing, outbound goods and marketing. These core activities in a manufacturing firm are supported by other departments like human resources, finance and research and development. There will be other groups that will support the manufacturing activities of the company, and these are third parties involving in the raw materials and processed materials that will be factors in the manufacturing of the products. When contracting services, note that it is restricted to labor and other allied services only.
Where there is excellence in manufacturing, contract manufacturing is …