contract manufacturing in international business

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Contract manufacturing in international markets is used in situations when one company arranges for another company in a different country to manufacture its products; this is also known as international subcontracting or international outsourcing.

What is contract manufacturing in business?

Contract manufacturing is the process of outsourcing certain production processes to a third-party company. For example, a company may outsource the production of specific components for a product that they then assemble.

advantages and disadvantages of contract manufacturing in international business

What are the main advantages and disadvantages of contract manufacturing?

Pros and Cons of Contract Manufacturing

  • You gain the expertise of their team. You signed a deal to produce a new device. …
  • Their investment is your gain. …
  • Your cost drops; your profits rise. …
  • You have less control over the product. …
  • Your product is not their priority. …
  • You have concerns about quality.

What is the difference between contract manufacturing and outsourcing?

The short answer: The difference is very subtle. The main difference is that contract manufacturing is a form of outsourcing to practice when you don’t have access to the necessary resources to produce products. And outsourcing is usually a tactic to redistribute resources and reduce costs.

How do you manage contract manufacturing?

Following are ten tips to consider in planning a program with a contract manufacturing partner.

  1. Select a CM Partner Early in the Process. …
  2. Define True Scope of Work. …
  3. Prove-Out Process and Freeze Design Early. …
  4. Define Sourcing Requirements. …
  5. Assume Unknown Design Iterations.

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