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 or third Party 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.
Contract Manufacturing is the process commonly used in Pharmaceutical, Aerospace, Personal Care and Automobile industries.