How To Decide Between Contract and Toll Manufacturing

Lake Oconee Boomers

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How To Decide Between Contract and Toll Manufacturing

When choosing to outsource your chemical manufacturing, two terms you’ll hear frequently are “contract manufacturing” and “toll manufacturing.” If you’ve never used these services before, it can be hard to tell the big difference between these two forms of manufacturing. Allow us to give you some insight into how to decide between contract and toll manufacturing so that you can pick the right custom chemical manufacturer for your business and needs.

Why Use Chemical Manufacturing?

Before we get into how to decide between contract and toll manufacturing, let’s discuss why you would want to outsource at all. Well, your own business may be at max capacity, or you may not have the equipment and expertise to produce the necessary chemicals in-house. In these situations, outsourcing to a chemical manufacturer becomes your best option. It’s a cheaper investment to make than paying out-of-pocket for chemical-making equipment, its maintenance, and the space you need to store it. This doesn’t even include the time and effort it would take to train employees with the skills and knowledge to use and care for such equipment.

Contract Manufacturing

Contract manufacturing allows your business to keep an aspect of control in the production process. In this scenario, you pick the vendors and supply the chemical manufacturer with the materials needed to produce the final product. This saves a lot of time, as the chemical manufacturer doesn’t need to select vendors and wait for suppliers to transport the materials to them. Furthermore, you’re able to reduce costs when you spread production across many units.

Toll Manufacturing

In contrast, toll manufacturing allows the chemical manufacturer to decide what vendors and materials to use in the final product. Often, deferring to the chemical manufacturer’s judgment ensures that you use only the best materials. Furthermore, this grants the manufacturer an opportunity to delegate sub-processes that aren’t parts of their core expertise, ensuring that you get the highest quality product possible. Additionally, you don’t have to worry about price fluctuation should material prices inflate because you and the manufacturer decide on the final price from the start.