What is toll manufacturing, and how does this work in Mexico? In the world of business and production, it’s important to recognize the different types of fabrication. Which is best suited for your company? If you’re looking for a convenient third-party, you’ve probably set your sights on foreign investment in Mexico. Here’s how the toll manufacturing process works. Is it the best fit for your company’s goals? Let’s find out.
Third-Party Manufacturing
Any manufacturing process involves the transformation from A to B: the raw material becomes a finished good. However, this transition involves a whole supply chain, especially when we involve a third party, as happens in many companies in the industrial field.
For example, U.S. companies require labor from efficient countries, which speeds up production, lowers costs and results in a product of excellent quality. Such is the case of companies that manufacture either parts or complete products in Mexico, specifically in cities such as Tijuana, Monterrey or Guadalajara.
Toll Manufacturing
So, what is toll manufacturing? It refers to a production arrangement in which a source company hires a third party to request their manufacturing services. A key to understanding this type of manufacturing is this: the raw material must be provided by the source company.
Why is toll manufacturing convenient? Well, there are several reasons why this could work well for different companies. Here are a few:
- Sometimes, the source company works with specific raw materials, so it works best for them to provide it, instead of leaving all the sourcing to the third-party.
- When a third-party specialized in specific processes, has the technology to develop desired results, or manages a workflow, source companies benefit from their know-how, and can actually save more by hiring their services.
- With toll manufacturing, third parties are only responsible for the final product, which works great.
Toll Manufacturing in Mexico
Understanding more about what is toll manufacturing and if it’s available in Mexico. This country is widely known for its excellence in the industrial field. Additionally, there are several manufacturing models, fueled by the IMMEX model, which allows raw materials to be imported into Mexico duty free, provided they are processed and exported as finished goods.
In this sense, Mexican companies do provide toll manufacturing services. Also, foreign companies have found an incredible collaboration when dealing with Contract Manufacturing solutions in Mexico. Discover more fascinating insights by checking out our other informative blog articles: Music Equipment Manufacturers in Baja: How Do They Work?, or Want to Know More About Mexico’s Manufacturing Industry?
Is toll manufacturing the right choice for you? Would it be better to select another manufacturing model? If you still have questions regarding starting a business in Mexico, contact Tijuana EDC’s team of business experts. We will be glad to guide you in this process, so you focus on your product and the results of your company. Contact us for more information!
