CONTRACT MANUFACTURING - Essay Example

This enables these organizations to dedicate their resources, time and workforce to the tasks that are central and pivotal to their primary business and at which, they are really good at (Krekora 2008). These companies approach the potential contract manufacturers with a specific process, design or prototype. The contract manufacturers quote their price, while taking into consideration, the procedures, tools, labour, costs and inputs requisite for the product under consideration. In that context, the customer firms do prefer to procure multiple quotes from varied contract manufacturers.

This enables them to maximize their profitability and quality, by selecting a bidder that is most capable and competitive in terms of price and technology. Once a contract manufacturer is selected, one takes care of all the procurement, manufacturing, logistics and supply chain issues associated with the assigned task. The task may involve the manufacturing of a complete product, to the assembly of specific components. Thus, contract manufacturing is one form of outsourcing. There exist many reputed and established brands that opt to go for contract manufacturing, instead of maintaining their own plants and logistics facilities.

Since 2005, this business practice has gained a solid foothold in the international pharmaceutical industry. Varied pragmatic and strategic reasons have contributed to this trend. In the current scenario, the international manufacturing industry affiliated to pharmaceuticals and drugs has exhibited an extensive growth. Major pharmaceutical companies in the developed and the developing world have finally come to the conclusion that they stand to reap massive benefits by going for outsourcing and contract manufacturing.

Resorting to contract manufacturing enables these pharmaceutical companies to build on their overall production capacities, without incurring the commensurate