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FAQs
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What is the difference between contract manufacturing and toll manufacturing?
A toll manufacturing is when the manufacturer sends raw material to a third party service provider. The service provider provides a subset of manufacturing for a fee. Contract manufacturing is when a third party sources all raw material and produces the goods. -
What is a contract manufacturer and how does it work?
Contract manufacturing is a form of outsourcing where a manufacturer enters into an arrangement or formal agreement with another manufacturing firm for parts, products or components, which the former will then use in its own manufacturing process, to complete its own product. -
What is a tolling cost?
Tolling Fee means the fee charged by Supplier to Buyer on a per pound basis for each SKU of the Products which shall include, among other things, labor, costs, utilities and fixed overhead (including real property leasing obligations, if any). -
What is an example of contract manufacturing?
For example, Taiwanese company Foxconn Technology Group is the world's largest contract manufacturing company when it comes to electronics, having manufactured products such as the iPhone for Apple, the Kindle Fire for Amazon, and the XBox One for Microsoft.
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Signature toll manufacturing agreement
[Music] hey guys my name is Jared hall and I'm president of a Power Corp a power Corp is a contract manufacturer that improves the manufacturing efficiencies for startups so today's video is going to explain what is contract manufacturing a contract manufacturer is a company that you contract out you to make your products so you're probably thinking that is a factory and you're right it can be a factory however it's important to remember that not all factories are contract manufacturers but all contract manufacturers are factories and the reason for this is that contract manufacturers provide some extra services that you cannot get from factories that provide you guys with commoditize products that you find on Alabama so that is more of the main difference so for you guys you guys have to worry about a lot of things as a start-up such as driving sales fundraising developing partnerships building and sustaining hype developing your products managing the logistics managing the production managing the projects and actually figuring out your supply chain however if you're able to partner up with the contract manufacturer they're going to be able to provide you with logistics they're going to be able to provide you with production services even if they can't do it in-house they have a supply chain that is going to be able to help you guys with those parts also they're able to manage your products one important thing though is that you should not be giving full authority to your cm to be able to develop it such as a turnkey solution you guys have to remember that this is still your brand this is still your product and you should be owning the development however a contract manufacturer will be able to provide you with a lot of resources and a lot of maybe engineers as well to be able to optimize your development speed so this is contract manufacturing they they help you guys with pre-production production quality control managing your project and also the supply chain so first pre-production contract manufacturer they're going to be able to provide you with engineers for us personally we have 20 engineers that are both mechanical and electrical all of these they're going to be able to provide you with DFM which is designed for manufacturing and this basically figures out how would you get your product from prototype to production as efficiently as possible and also how do you optimize the costing as well another one will be prototypes they shall be able to provide you with very quick efficient cost-effective prototypes and the last one will be tooling such as how do you optimize your tooling design the next one will be production what kind of production services do they provide you with again every single cm they probably won't be able to have all of the production processes that you need in-house however they should have a supply chain team that is set up to be able to provide you with the parts that they do not provide you with in-house also next they should be able to provide you with final assembly and they also should be able to provide you with standard operating procedures or SOPs which basically details how to make or build the product and it goes into account for each step that is needed the next one will be quality control your cm is going to have to own the quality standards you guys don't have to work together to build these standards similar to SOPs the quality they have s IPS which are standard inspection procedures and this goes in this takes into account how to check each individual parts and product they should also have their IQ c PQ c and f QC teams in place IQ c is income in control so this is really anything that's coming into the factory for the first time such as raw material p QC is in process and this is going to be anything that is being processed where there's going to be sheet metal electronics sub components thing the things like this f QC is final quality control and this is going to be looked at once the product is final assembled and after that the next one is project management this is going to be how you manage your projects every factory is going to have one person that is kind of going to be your point of contact and they're going to also be able to help you to communicate with the engineering team so you don't have to be speaking with them but supply chain the production and quality teams you have one purse that is able to kind of consolidate all of this into one group there also wanted to be able to help you with scheduling so they're going to coordinate with all of the other teams bring it all together and get you a schedule when you guys can launch and when you guys could scale up as well the last one is going to be supply chain management for supply chain management they should be able to provide you guys with pre approved vendors that they have been working with for years for the materials that they do not have in-house they're also going to be able to manage all of these vendors and also one another one will be lead time so they're going to figure out the lead time for each individual parts that is going to be brought into the factory to be final assembled and then provide that lead time with you as well another one will be payment terms so instead of having payment terms with so many different factories you only have one payment term and that's going to be with the contract manufacturer that they have and then your contract manufacturer they're going to negotiate different payment terms which with different factories I hope this guy I hope this gives you a pretty good understanding about what contract manufacturing is if you guys have any questions at all I hope that you guys feel free to contact me thanks guys I appreciate it
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