Contract Manufacturing vs Toll Manufacturing
Posted on Tuesday, January 28, 2020
The difference between contract manufacturing and toll manufacturing is the company that provides the raw materials used in production.
What is Contract Manufacturing?
Contract manufacturing is when a business outsources specific elements of product creation to a third-party contract manufacturer. These third-party facilities can provide design services, create whole (or parts of) products, assemble items, package, and distribute products across the globe.
Even as a third-party, their services are often less expensive than if the business were to hire a production force, maintain equipment, and distribute items on their own. A contract manufacturing company can allow you to focus your energy in other areas, such as marketing, without worrying about product quality.
What is Contract Toll Manufacturing?
Contract toll manufacturing is very similar to contract manufacturing in that the third-party can design, produce and distribute a product for a client’s business. The difference is that the client provides all of the raw materials needed for production.
Contract toll manufacturing is a great option for companies who have affordable access to materials or semi-finished products that only need to be processed or assembled into a finished product. It saves the client time, energy, and money in that they don’t have to worry about the mechanical equipment or production team.
Example of Contract Manufacturing
As an example of contract manufacturing, let us imagine that you have a great idea for a new scented shampoo that adds extra shine to the consumer’s hair. You can approach us with your plans and formulas and we will work with you to design a quality finished product. At that point, as a contract manufacturer, we would purchase the raw materials needed to produce the shampoo from our trusted providers.
Using our state-of-the-art equipment and our experienced specialists, we would combine those raw materials into your perfect product. When the product is completely assembled, we could package and distribute the shampoo either to your business location or across Australia and beyond.
Example of Toll Manufacturing
Following the same story as above, you have discovered or created a unique substance or substances that you would like to incorporate into a new shampoo. As you already have (or can easily source) the raw materials, you pass them off to us to manufacture the product for you.
Again, we would use our team of specialists and our equipment to create the shampoo on your behalf. This saves you time, energy, and money in that you don’t have to purchase and learn to use expensive manufacturing equipment. You can leave those details to us and spend your time and energy focusing on other tasks, such as marketing your new product.
Key Differences Between Contract Manufacturing and Toll Manufacturing
The only main difference between contract manufacturing and toll manufacturing is the sourcing of the material. As contract manufacturers, we have many trusted provides from whom we can purchase quality raw materials at a good rate. While it is likely that we can get a better deal for most materials, we understand that this is not always the case, especially if your company develops some materials on their own.
We can also assemble and package pieces of products that have already been manufactured. Whatever you need, we are here to help.
Health Focus Manufacturers is an Australian Certified Organic manufacturing company with combined decades-worth of knowledge in the industry. Our aim is to efficiently provide you with a quality product that you would be happy to sell to your customer base. Regardless if you need contract or toll manufacturing, we are here to help you produce your product. Contact us today.