Contract manufacturing is the way to go for most small start ups looking to get their brand into the marketplace. Let’s face it, the cost of doing the initial R&D is bad enough without being confronted by the even bigger costs of launching the product. That means making it is sufficient quantities so that you have some meaningful volume in front of the consumer. Can you afford to contract manufacture is one question ? The other big question is are you prepared to relinquish control. As an entrepreneur it is more than likely that you have complete control over how the product tastes, looks, is marketed and all the other aspects which make the product yours. Going with contract manufacturing often means that you hand over a good portion of that control – it could mean some serious compromises if the product has to meet their manufacturing requirements and not your ultimate vision.
Choosing the right contract manufacturer might be the most important decision that is made. Get it wrong and it can be the end of your dream. Get it right and it might even open up avenues as yet unthought of in terms of new ideas and new markets.
Enough of the apocalyptic warnings !
Capability
Firstly, the contract manufacturer has to be one that can handle and make your product to the volumes you need. The technology is the feature here. When it comes to beverages the contract manufacturer tends to be one that focusses on a core aspect of the industry. It might be soft drinks, alcoholic drinks, dairy products. In a number of cases they might drill down further to the type of packaging they can handle such as cans, glass and or plastic, kegs etc. One of the reasons some packaging is excluded is the filing method. The type of filling is critical because that often dictates the type of packaging handled. They might only do cold-fill, hot-fill, inpack, use cold sterilants, etc. By the way, can they carbonate the product ?
In reality a series of questions regarding the technology is key as long as it is pertinent to your product.
The Contract Manufacturer
Contract manufacturers have a range of filling lines suited to not only their capabilities but the capacity for production. It might be highly valuable in the beginning to start with someone who produces small volumes at the pilot plant level. Let’s say a palette load. It’s very off putting to be confronted by a producer who needs tanker loads of ingredients for a 12 hour run when you have not even trialled the product in the market place.
By the way can they handle your ingredients ? Check if they can receive your ingredients in the containers and then manage them. Some producers have strict policies regarding the type of suppliers dealt with.
Assuming the factory is capable of producing your product, there might be a delay in production because you become part of the queue. Ideally you want somebody who can manufacture within the month especially if you have an important showcase event coming up. Even so, knowing how long it takes for a product to be manufactured needs to be checked. The contractor might be ideal but it could be up to 2 years before you see your product manufactured.
Do they have a returns policy in place. Nothing worse than seeing your product blow if their hygiene in the production hall was not up to scratch. It does happen by the way ! Incidentally, check accreditation, their food safety and HACCP. Does the contract manufacturer look clean and well-managed. I am assuming of course that you will visit the facility. I look to look at the place and speak to some of the people on the line. If they cannot speak your language then you could be in trouble because communication is also a key requirement.
I’m always interested in entrepreneur’s viewpoints and I know I have only skimmed the surface but if you want any further advice – especially on specific details, give us a bell. I am going to add more detail to this post because contract manufacturing has many positives and negatives associated with it.
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