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Contract manufacturing and toll manufacturing are business models utilized by various companies. Contract manufacturing involves a company contracting with another manufacturer to produce specified products for a predetermined time. This method may serve as either a transitional phase towards in-house production or as a fundamental part of the company's strategy. In contrast, toll manufacturing typically refers to a situation where a company provides raw materials to a manufacturer, who processes them into finished goods for a fee. Both models allow businesses to leverage external manufacturing capabilities, but they differ in ownership and processing responsibilities. Ultimately, these approaches offer flexibility in production and can enhance efficiency in the supply chain.
