Third Party Manufacturing refers to the process in which a firm hires a contractor for manufacturing of goods according to their designs and formulas. Contract Manufacturing is a model adopted by companies ranging from small scale to large scale industries.
These days Industries having large scale production produces goods for the third party. The reason for third party manufacturing can be spare production capacity. When the production is not fully utilized then manufacturer looks for alternative to use the existing production facility.
It is beneficial for both parties as a trader can get goods manufactured on his brand name from the manufacturer. In this system a trader does not needs his own manufacturing facility.
Third Party Manufacturing is the process commonly used in Pharmaceutical, Aerospace, Personal Care and Automobile industries.
Contract Manufacturing Pharma
Contract Manufacturing or Third Party Manufacturing is the essence of pharmaceutical industry. Pharma industry has shown tremendous growth due to main reason that production on large scale is possible through Contract Manufacturing. Contract Manufacturing in pharma is like outsourcing manufacturing of pharma products.
Advantages of Contract Manufacturing in Pharma
- A contract manufacturer is the one who produces for a lot of customers because of that he can buy raw material in bulk which gets the cost of production down making it win win situation for all.
- The Quality of product will be maintained as they will be produced on hi technology machines and according to good manufacturing practice.
- The Contract Manufacturer does not have to spend on Advertising and Marketing.
- The firm does not have to make capital investment on plant and machineries.