Contract manufacturing

Definition

Contract manufacturing is a form of outsourcing where a company hires another company to produce parts or entire products on its behalf, typically to save on costs and leverage specialized manufacturing capabilities. It allows businesses to bring products to market without maintaining their own factories.

Related terms

Outsourcing:

The business practice of hiring a party outside a company to perform services or create goods that traditionally were performed in-house by the company's own employees and staff.

Supply Chain Management:

The management of the flow of goods and services, involving the movement and storage of raw materials, of work-in-process inventory, and of finished goods from point of origin to point of consumption.

Globalization:

The process by which businesses or other organizations develop international influence or start operating on an international scale, often leading to increased interconnectedness and interdependence among global economies