How are Contract Manufacturers different from OEM Manufacturers?

adv_webdev

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#1
Where can I find the definition of contract manufacturer? How are they different from OEM manufacturers?

If a company "A" owns the design of a product, submits the 510K, tech file etc. but outsources the manufacturing to Company "B", can we call company B a contract manufacturer?

Thank you very much for any help clarifying this.
 
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bobdoering

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#2
Re: Definiton of contract manufacturer

One definition is "Contract manufacturing is when a manufacturing company generates products, or goods, under the brand name of a different company. Contract manufacturing is sometimes called private label manufacturing." some folks may have a wider view of outsourcing as contract manufacturing. There is probably not a universal definition.

Here are some other references:

Success with Tech Transfer: Mastering the art of moving to a CMO

Introduction to contract manufacturing
 

Ronen E

Problem Solver
Staff member
Moderator
#3
Re: Definiton of contract manufacturer

Where can I find the definition of contract manufacturer? How are they different from OEM manufacturers?

If a company "A" owns the design of a product, submits the 510K, tech file etc. but outsources the manufacturing to Company "B", can we call company B a contract manufacturer?

Thank you very much for any help clarifying this.
Hi,

Here's the definition from the FDA's website:

Definitions of Establishment Activities
Contract Manufacturer - Manufactures a finished device to another establishment's specifications.

As far as I know "OEM" (Original Equipment Manufacturer) is not part of the FDA official terminology. It usually refers to manufacturers who sell components used in other finished products (which are then placed on the market).

As to your "A" and "B" I think the answer is yes.

Cheers,
Ronen.
 

Wes Bucey

Quite Involved in Discussions
#4
Re: Definiton of contract manufacturer

Hi,

Here's the definition from the FDA's website:

Definitions of Establishment Activities
Contract Manufacturer - Manufactures a finished device to another establishment's specifications.

As far as I know "OEM" (Original Equipment Manufacturer) is not part of the FDA official terminology. It usually refers to manufacturers who sell components used in other finished products (which are then placed on the market).

As to your "A" and "B" I think the answer is yes.

Cheers,
Ronen.
I agree with this response.

The essential point is differentiation between "supplier" and "contract manufacturer" depends on the concept of delivering a complete finished product versus delivering components which would be assembled elsewhere. That is to say, the FINAL assembler of components is the manufacturer. If it is a manufacturer (B) for hire by some other organization (A) that puts its label on the product, then B is the contract manufacturer.

For example, my machining company was a "contract machining company" in that we did no designs of our own, but worked from customers' designs. 90% of our production were components which went to OEMs who assembled them to a final product. Some of those OEMs were simultaneously "contract manufacturers" because they sold some of the finished products containing our components to other companies as "private label" goods. In 10% of our business we were "contract manufacturers" because we made finished products (bone screws, scuba valves, etc.) which were sold at retail by our customers under their label without further processing.

It is important also to note our customers using us as contract manufacturers usually did so because we had an open and transparent quality system providing complete quality records and traceability of everything we made, able to stand muster with FAA and FDA regulators who had the right to visit our facility for inspection and audit as part of our contract with each customer. If you consider being a buyer of contract manufacturing services, be sure the contractor is similarly up to snuff on its quality system. Consequently, prospective contract manufacturers with such a good, transparent system have a marketing edge over those that don't.
 
M

MIREGMGR

#5
Re: Definiton of contract manufacturer

It might be worth noting that, within FDA jurisdiction, "private label" sometimes has nearly the opposite meaning of how it's been used in this thread.

When a Manufacturer labels their product to be sold under the name of a distributor, that's frequently called "private label manufacturing". The Manufacturer remains fully responsible for the product's regulatory stance.

The distinction in usage depends on whether the customer is an OEM or a distributor. Wes's description is of dealing with the former type of customer; my employer mostly deals with the latter type.

Sometimes the distributor is quite particular about what they want to buy; this might be called "providing specifications", except that most distributors don't have a regulatory system and aren't able to take responsibility for products...so the Manufacturer has to handle it. It's just how the marketplace works. In that respect, the FDA's role definitions are sometimes unrealistic.

As to Wes's comments on contract manufacturer's quality systems, note that the FDA doesn't require a contract manufacturer to be a registered Device Establishment, or even have a quality system except in special circumstances. That's not to say that, as Wes suggests, customers won't prefer a contract manufacturer that has their act together. Whether a contract manufacturer is registered and has a QMS also isn't relevant to the FDA's ability to come visiting, if you do work for a device marketer that gets into trouble and the evidence-trail leads to your door.
 

Wes Bucey

Quite Involved in Discussions
#6
Re: Definiton of contract manufacturer

<SNIP> Whether a contract manufacturer is registered and has a QMS also isn't relevant to the FDA's ability to come visiting, if you do work for a device marketer that gets into trouble and the evidence-trail leads to your door.
Absolutely! The minor point I was trying to make is that reputable OEMs (versus reputable distributors) do take the primary burden of compliance and registration with the FDA, BUT they want the contract manufacturer they hire to be squeaky clean to avoid any repercussions if, by some mischance, something does go wrong so they can have a clear route to finding and fixing a nonconformance (versus nightmares of mixed lots, vague traceability, missing documentation, etc.)

The main point was that quality and service by the contract manufacturer are important marketing points and should be primary concerns for purchasers. The underlying reason I see for supply chain SNAFUs is making purchase price the primary criterion, rather than taking into account all the soft costs and risks of dealing with a haphazard quality system.

:topic:There is also a marketing ploy used by some manufacturers (often in food products) where the manufacturer will make identical products, but use its own array of different trademarks [and packaging] to cater to different geographic or ethnic markets. This is not strictly private label, since goods with the same trademark may be sold to different wholesaler or retailer customers, who have no say in the formulation, only in which trademark and packaging they prefer to purchase and resell. In such cases, only the manufacturer, not the distributor, wholesaler, or retail store owns the trademark on the label and the formulation is created and maintained by the manufacturer.
 
M

MIREGMGR

#7
Re: Definiton of contract manufacturer

...note that the FDA doesn't require a contract manufacturer to be a registered Device Establishment, or even have a quality system except in special circumstances.
Today I had occasion to re-visit this thread, and realized that the above answer needs qualification.

The above was true under the regulations through the FDA 2012 regulatory year if the contract manufacturer was located in USA and they did not distribute the product to end users.

If either of those was not true, the contract manufacturer was required to Register and List.

Under the FDA 2013 rules, all Contract Manufacturers must Register and List.
 
#8
Re: Definiton of contract manufacturer

...
Under the FDA 2013 rules, all Contract Manufacturers must Register and List.
And I believe they have from 1 Oct to 31 Dec of this year to register. Component Manufacturers do not have to register, I believe.
 
M

MIREGMGR

#9
Re: Definiton of contract manufacturer

And I believe they have from 1 Oct to 31 Dec of this year to register.
Yes; however, note that it's no longer possible to Register under the 2012 regulations, even though if a 2012 Registration existed already it would remain valid through 12-31.

Component Manufacturers do not have to register, I believe.
The proper term in this case per the defining regulation, 21CFR 807.65(a), is "Component Maker".

If you think these regulations may apply to your circumstance, it's important to read all of 21CFR 807 to understand the qualifications.
 

Doug Tropf

Quite Involved in Discussions
#10
Re: Definiton of contract manufacturer

And I believe they have from 1 Oct to 31 Dec of this year to register. Component Manufacturers do not have to register, I believe.
Not sure on the requirement for component manufacturers, but the FDA advised that our company, a contract medical device sterilizer, has until November 1, 2013 to list the devices we sterilize for our customers.
 
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