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Contract manufacturing refers to a type of arrangement whereby one company is contracted by another company to produce something on its behalf. The contractual agreement might be for the production of just one item in the production process or it might be for the production of a whole line of products. As such, the cosmetics contract manufacturing process refers to a procedure whereby one company contracts the services of another company for the production of cosmetics.
Companies might decide to embark on cosmetics contract manufacturing for various purposes, including its appeal as a form of competitive advantage. What this means is that the process of outsourcing the production of cosmetics to another company allows a business to focus on its strengths, which may be marketing the product rather than manufacturing it. In its application to cosmetics production, cosmetic contract manufacturing can also be a form of saving money if a small startup company outsources the production of the cosmetics to another established company that has the facilities to carry out the production process in a more expeditious manner. It could be that the small company lacks the resources to purchase expensive machinery needed for the production process, or it could be that one part of the production process is beyond the capability of the small company.
Assuming a stage in the cosmetics production process requires the use of a particularly expensive machinery that a company does not have, it could outsource the production of the cosmetics to another company that has that particular machinery or equipment rather than purchasing it. As such, a company could outsource the production of just one particular item in a line of cosmetics to another company based on an analysis of the merits and demerits of producing that item. For instance, based on the application of cosmetics contract manufacturing, an originating company could outsource the production of the eyeliner only due to the lack of a particular equipment needed to finish the production of the eyeliner, even though the cosmetics line also includes lipstick and mascara. While the process of cosmetics contract manufacturing might have its benefits, it also has some disadvantages that might make it unattractive to manufacturers. Such disadvantages include a lack of complete control over quality control measures, the lack of control over the timely production of the cosmetics, and other identified issues.