An arrangement between a manufacturer, producer, or packager and a customer where the manufacturer creates a product as a service to the customer. Raw materials and packaging may be provided by and/or owned by either party in the arrangement, and the invoice for the product may be for a mix of such materials and services, or a mixed fee per unit produced which accounts for materials, services, warehousing, storage and profit.

Manufacturers often engage in these activities to fill out their production line time and expect to make a profit similar to a Private Label arrangement but less than when producing their own product, whether it be branded in a retail sense or not.

Note: This term is most often used in the food industry and is generally equivalent to a “Contract Manufacturer” in other industries.

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