Contract vs OEM Manufacturing


Should You Choose Contract or OEM Manufacturing?
Aztec Plastic is experienced in both


There are several strategies available in deciding which approach to take for plastic manufacturing. The one you choose depends on many considerations, including the type of product to be developed, the production technologies required, and the equipment necessary to complete all the processes. You also need to consider which type of manufacturer you will be working with. Below is a comparison of the two major types of manufacturers—contract manufacturers (CM) and original equipment manufacturers (OEM)—to show how their strategies can differ.

Plastic contract manufacturer

A plastic contract manufacturer (CM) refers to a firm that manufactures parts or products for a different company under a contract. Contract manufacturing is a form of outsourcing in which the hiring firm provides the manufacturer with a design, and they produce the products as a contractor.

There are some benefits of working with a plastic contract manufacturer:

  • The hiring firm does not need to purchase all the equipment and/or a facility required for the production process.
  • The hiring firm does not need to worry about hiring highly skilled labor. It can benefit from the workforce and skills that the contract manufacturer already has in place.
  • Usually, plastic contract manufacturers can acquire materials for lower prices, since they will buy them in bulk for multiple customers.
  • The hiring firm can focus on other facets of their business while the contract manufacturer takes care of the production of the products.
  • The contract manufacturing business model is common in industries like aerospace, medical, automotive, and defense.

Using a contract manufacturer means they handle the entire project. They take your product conception, build a prototype, prove that the concept works, make the necessary adjustments, handle the full production run, and take care of packaging and logistics. You conceptualize and market the product, and the contract manufacturer produces it.  

OEM plastic manufacturer

Original Equipment Manufacturer or OEM refers to the original manufacturer of a part or product. An OEM plastic manufacturer uses its own label to sell its products, although the product may be marketed by a different manufacturer. This means that an original equipment manufacturer produces components that are used in a product owned by another company. Then, the finished product is marketed to users by the company that owns the product.

For example, if The Smith Company produces power cords that are used in The Jones Company’s products, which are then marketed to the public, then The Smith Company is an OEM. The original equipment manufacturing business model is often used in the automotive and computer software industries.

There are several benefits of using OEM plastic manufacturers:

  • Highly competitive pricing 
  • Lower capital and operational costs for your business
  • You can focus on product development, marketing, and sales

When you are considering starting your production process or finding a production partner, it is important to be aware of all your choices. Aztec Plastic has experience in both of these situations, and we work with companies both as a plastic contract manufacturer and as an OEM plastic manufacturer. Our team can guide you through the whole process and help you make the right choice for your business. 

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