Examples of contract manufacturing

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Every industry relies on outside contractors for various parts of their process. This is especially true in manufacturing due to the countless parts in even the simplest product.

Let's take a muffin for example. To make muffins and sell them in a supermarket, you need to:

Obtain flour, sugar, yeast, butter, milk, etc.
Own or rent a kitchen with a sufficiently large oven
Hire people to prepare the dough and bake it
Take care of the assembly with frosting, chocolate chips, etc.
Packaging the muffins in individual units, half dozens or dozens, suitable for sale in supermarkets
Managing logistics and transportation with the necessary refrigeration
Let's take a step back. Let's assume that butter and milk are purchased at the supermarket. If vp audit email list your company is large enough, you can commission a manufacturer to custom produce flour, sugar or butter.

So with contract manufacturing, you can outsource procurement, processing, or part of your own production. Here's how some of the world's largest companies do it.

Starbucks Coffee Beans : Starbucks purchases 3% of the world’s coffee supply from contract manufacturers in more than 30 countries across Latin America, Africa and the Asia-Pacific regions, many of whom grow their coffee to their specifications. These coffee beans then undergo a period of roasting, packaging, storage and transportation—all through suppliers—before they reach a store near you.

Magna Steyr and car manufacturing : Austrian company Magna Steyr is the world's largest contract manufacturing company in the automotive industry. In addition to manufacturing successful models for BMW, Toyota, Jaguar, Volkswagen, etc., Magna also helps brands develop and design new vehicles.

Seed Beauty and Kylie Cosmetics : Forbes reports that Kylie Cosmetics outsources its manufacturing and packaging “to Seed Beauty, a private label producer in nearby Oxnard, California.” In this industry, this is fairly standard. Estee Lauder, the company that owns cosmetics brands like Clinique, Mac, Bobbi Brown, Tom Ford Beauty, etc. also outsources regularly.

Original Equipment Manufacturers (OEM) : When a product uses another company's product (not just a component, but an assembly in itself), it is called an OEM. For example, a laptop speaker may be manufactured by an OEM.