This YouTube video by 92Express describes the concepts behind contract manufacturing.
What is it? Many industries require specific items for display purposes or to use in a piece of machinery. Some of these organizations have in-house product manufacturing departments. However, when this isn’t available, companies turn to organizations to make their product. This is the concept behind contract manufacturing.
To put it another way, a contract manufacturer is a factory that builds parts for other factories. Normally, this takes place between two businesses (B2B). For instance, a contract manufacturer that creates specialized tubing for an oil refinery.
Contract manufacturers are used a lot of times by startups. Since their main goal is to develop an operational plan and generate a customer base, they don’t have the time or capacity to fabricate necessary parts. This is why they turn to contract manufacturers to help.
On top of this, utilizing this service saves money. There’s no overhead required for construction, training, and the purchase of machinery. Instead, businesses reach out to the contract manufacturing service and their subject matter experts to construct the needed products.