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The Benefits and Disadvantages of Outsource Manufacturing

Many companies worldwide, large and small, rely on a business model called contract manufacturing, better known as outsourcing. The concept is simple-two companies divide the manufacturing and sales/marketing aspects of a business. One is a hiring firm, who comes up with the product specifications and brand. They then sign a contract with a contract manufacturer, the firm that produces and packages the components and products. In short, it’s a business agreement made to save time and money, as well as streamline the manufacturing process and provide a better made product. Here’s an example: A soft drink company has come up with a new recipe. They have it made by an established soda processing plant, who deals with buying the ingredients and managing the labor while they focus on branding the soda and making commercials and ads to sell it.

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