A Contract Manufacturer (CM) is a firm that manufactures components or products for another, hiring firm. Many Industries utilize this process including; Aerospace, Defense, Semiconductor, Computer, Oil Field, Medical, Automotive, Commercial.

The way the business model of contract manufacturing works is the hiring firm (typically an OEM) approaches the contract manufacturer with a design. The Contract Manufacturer will qoute the parts based on processes, labor, tooling, and material costs. Typically an OEM will request quotes from multiple CM's. After the bidding process is complete, the hiring firm will select a source. For an agreed upon price, the CM then acts as the hiring firm's factory, producing and shipping units of the design on behalf of the hiring firm.

Many well-known companies use contract manufacturing as an alternative to operating and maintaining their own factories. Contract Manufacturing can be used for anything from single componants to a complete product.Printers, computers, and cellular phones are all examples of products that are made using this method.