Outsourcing production duties allows a company more time to concentrate on its core competencies--sales, information management, marketing, etc. Using a contract manufacturer (CM) potentially decreases debt by shifting the capital-intensive manufacturing arm to another company
A top-end contract manufacturer is not just a production arm to be managed, but a full-service solution aimed at reaching the same goals with the same customers, investors and shareholders in mind. Today, CMs must continually strive to reduce their client costs. There are several considerations in choosing a compatible contractor.
What are the Benefits?
When properly executed, the right partnership between vendor and contract manufacturer can lower costs by minimizing expensive investments in equipment, plants, expert personnel and the amount of stockpiled inventory kept in reserve. CMs can improve product quality and decrease time to market. An increasing number of top CMs are offering R&D capabilities as part of their contract-manufacturing package.
As the functional food market grows and a seemingly endless supply of new products fills the shelves, time to market becomes a top priority. Shorter lead times mean fewer inventories to be held by suppliers. With the ability to alter equipment specifics to meet requirements at a faster rate, branded companies can consistently meet the needs of consumers as the marketplace fluctuates.
What to Look For
When looking for outside manufacturers, consider the following.1) Assess the services required. This will make comparing potential CMs easier.
2) Prepare questions to ask each CM (e.g., Do the facilities, equipment, processes, services, quality and certifications meet our needs? Do they have the capacity and production know-how to meet our demands? Is its reputation good?).
3) Review ingredient needs and restrictions. Define the product's flavor, color and shelflife specifications, as well as demographic targets.
4) When reviewing potential partners, do not hire strictly on cost. A less-expensive CM might mean a smaller staff available to work on the project. Quality and quality control measures should be the highest priorities.
Collaborating for the Best Results
Clearly defined objectives, specifications and processes are crucial to managing outsourcing effectively. Many companies create cross-functioning teams to help manage their CM systems. Assign a project manager who is responsible for day-to-day communications between your company and the CM, and senior executives from both companies should meet on a regular basis. Also be sure to include CM management in logistics and budgeting.
For a successful contract manufacturing relationship, it is best to choose on quality, reputation, functionality, reliability and corporate compatibility. These traits are representative of Century Foods International (Sparta, Wis.), which offers services in: agglomeration, dry blending, fluid bed drying, instantizing, labeling, packaging, particle sizing, pouching, RTD beverages, RTD filling, making smoothies and wet/dry processing.
For more information: Century Foods International, Bob Olson, 608-269-1900, bjolson@centuryfoods.com
