The Difference Between Contract Manufacturing and Toll Manufacturing

While contract manufacturing and toll manufacturing tend to be somewhat similar, they are often confused. Both options come with things in common, but have plenty of differences. When you choose between toll manufacturing and contract manufacturing, you’ll likely be looking for a specific strategic advantage one offers over the other.

Before looking at the differences between the two types of manufacturing, it’s necessary to define what each of these types of manufacturing is and how it works.

Contract Manufacturing

When you hire a contract manufacturer, you’ll gain access to their plant, labor force, and machinery. The company you hire as your contract manufacturing partner will provide everything you need to create your product without issue. This also means your manufacturing partner will take on all the risks when it comes to the manufacturing process including the stock levels, quality of raw materials uses and the costs. This is a full-service provider and everything happens through one company.

Toll Manufacturing

Just as with contract manufacturing, when you choose a toll manufacturing partner, they will provide the labor force, the machinery, and the plant or facility. They will also provide the raw materials and will often have ownership of the intellectual property associated with the products, which may include trademarks and patents.

However, many toll manufacturing arrangements do include one company providing the raw materials, while another provides the actual manufacturing.

What’s Different Between Contract Manufacturing and Toll Manufacturing?

These types of manufacturing may seem very similar, almost like they are the same thing, but they are not. They both share the similarity of allowing you to outsource the production process for your products. However, when you hire a contract manufacturing partner, it’s more of a one-stop-shop for everything you need, while toll manufacturing doesn’t provide the same one-stop-shop ability.

With contract manufacturing, you don’t have to worry about the raw materials, the facility, the machinery, or anything else to create your product. You can also own the trademarks and patents for your product. Most contract manufacturing companies also provide private labeling or custom products you can brand for your business, as well.

If you’re not worried about owning the IP for your product, toll manufacturing might work out well for you. However, if you want to hold the patents and trademarks, contract manufacturing makes more sense. It can also make more sense when you want a company with the ability to develop, create, brand, label, and ship your product.

Choosing the Right Option

For many companies, outsourcing the manufacturing process is critical. Choosing the right type of manufacturing partner means you have to understand the differences and similarities between contract manufacturing and toll manufacturing. It’s best to weigh the advantages of each as contract manufacturing fits with many companies, but this style of manufacturing may not fit perfectly with every company. However, if you want to own your patents and trademarks or if you prefer a company willing to take your product from conception to the shelves, contract manufacturing is the right choice for you. Contact BioThrive Sciences for your one-stop shop for Contract Manufacturing.