Industrial Nanotech Inc (INTK)

[bylosellhy]

The source company procures and supplies the raw materials or components to the manufacturer for production. The manufacturing company does not select or controls the vendor, nor does it have control over its quality. As a result, it can control the quality of the product only to the extent of the process which it is performing.

Advantages of Toll Manufacturing
The advantages of toll manufacturing from the source company’s point of view are:

Quality Control
The source Company can completely control the vendors and hence, it can control the price and quality of the raw materials used.

Benefit of Specialization
The source company can perform activities that are its core competencies. It can sublet the processes which some other company may specialize in. Hence, it can make use of the expertise and experience of the toll manufacturer to its own advantage.

Avoid Heavy Investment
The source company can use specialized machinery and equipment, godown and production space and even labor of the processing company to its own advantage. Because of this, it need not invest in expensive factory set-ups and still enjoy its benefits.

Highly Scalable Model
Toll manufacturing leads to higher production and sales volume because of which source companies can increase their customer base in geographical locations without being present there directly.