Companies often struggle to understand the difference between contract manufacturing and private label manufacturing. While there are some similarities, the two are actually quite different. However, the ultimate goal of both private label and contract manufacturing remains the same; produce high quality products that consumers want to buy.
Private Label Manufacturing
In private label manufacturing, one company makes the products but markets them under another company’s label or brand. The manufacturing company is the owner of the product and retains controls over product specifications, quality, and more.
Contract manufacturing
Contract manufacturing involves the outsourcing of the manufacturing and/or design process to another company. The owner of the company hiring the CM provides all of the necessary product specifications. Unless pre-determined by the company hiring the contract manufacturer, the CM cannot change the product specifications. However, it’s always a good idea to ask if there are ways to improve quality and reduce the costs of manufacturing. The right CM can usually provide insight into improvements to the manufacturing process or product design.
Benefits of Contract Manufacturing
Contract manufacturing is the ideal choice for companies looking to reduce risk and maximize operational efficiencies. Contract manufacturing has numerous benefits including:
- Reduced costs. Using a contract manufacturer allows companies to create high quality products at a much lower cost than producing the same products in-house. Companies that use a CM do not have to acquire or maintain appropriate staff, space, equipment, or technology.
- Lower risk. Production runs are typically made to order for specific quantities.
- Access to experienced professionals. Partnering with a contract manufacturer puts you in direct contact with experienced professionals qualified to offer advice on the design and production of a wide range of products.
Private label manufacturing and contract manufacturing both offer numerous benefits for businesses of all shapes and sizes. However, because of lower margins, contract manufacturing is typically the safest bet.
If you have questions about the contract manufacturing process, or you’d like to learn about outsourcing with a quality CM, Means Engineering can help. Please contact us for more information about our services.
Companies considering moving part or all of their production to a contract manufacturer need to take the time to learn all they can about the contract manufacturing process. This is important if you wish to develop a long-lasing, mutually beneficial business relationship with your contract manufacturer.
Most people think of contract manufacturing as a way to reduce the costs of production. While it is definitely true that outsourcing can significantly reduce production costs, what you might not realize is it also provides the unique opportunity for companies to gain access to the knowledge and experience of existing manufacturers.
Companies today are under a lot of pressure to create new products. While the design process requires a certain level of creativity and innovation, many new ideas come from older, existing products. Through reverse engineering, manufacturers can find new ways to utilize old ideas.
Consumers today expect high quality products that perform as expected time and time again. Unfortunately, companies often struggle to meet consumer demand.

