Contract manufacturing, or toll processing, is a way of producing and manufacturing externally from your own company. This is usually done when a certain product needs to be processed or manufactured on a large scale but the company doesn’t have the facilities to do so.
Toll processing is a form of outsourcing that allows you to mass produce necessary products without the need to purchase, house and staff all of the equipment needed to do so. This can save your business time and money.
Due to the fact that contract chemical processing companies must adhere to specific rules and regulations, it also ensures that your product is always safe and of excellent and consistent quality.
While it is entirely possible to process and manufacture these products internally, there are many reasons why hiring a toll processing company can be beneficial and better for your business.
Firstly, it saves you from having to expand or relocate to a larger warehousing facility in order to facilitate the production of the products. The machinery used often requires much more space and therefore can increase the cost of your facilities.
The additional machinery and manufacturing of the product will also mean that increased staffing is required. This means that training must be provided on how to handle the equipment as well as potentially having to hire additional staff.
The machinery itself will also need to be bought or hired which has extremely expensive upfront costs. This is often not feasible, especially for smaller companies. With the added costs of staffing, facilitating and purchasing the equipment, it can be very expensive.
This is why many companies will choose to outsource their processing and manufacturing as the overall cost can be much lower and the process itself can be much easier and more efficient.