Contract manufacturing: How to foster a great relationship

When you decide to launch a new product, you also have to decide whether you will manufacture it in-house or hire a contract manufacturer. If you decide to have someone else produce your product, the mutual relationship is a big factor in determining how smooth the launch is. The customer/contract manufacturer relationship can be advantageous for both parties as long as certain guidelines are followed.

Conducting Due Diligence

The first step after identifying a potential contract manufacturing partner is to identify whether the contractor is a good fit. There are numerous considerations when assessing this: How long has the company been in business? Do they have references you can talk with? Other considerations include: minimum volume requirements; order lead time; recent audit results; research and development (R&D) capability; raw material sourcing capability; storage of raw materials and finished goods; and tolling charge.

This is by no means an exhaustive list. There are good tools out there to help with pre-screening activity; one of the best is a supplier pre-approval questionnaire. This document goes through the pertinent questions and reviews compliance programs, quality procedures, food safety plan and the like. It requires supporting documents in each section to confirm they are doing what they say they are doing. 

What Will They Look for From You?

Part of the selection and vetting process is for the contract manufacturer to understand your product and what you want to accomplish. They will ask a series of questions, which might include: What is your annual volume? What lead times will you require? What packaging do you require? What will be your selling price? How much inventory do you need? Do you have the formula, or will we be formulating for you? Do you have product and raw materials specifications? Do you have processing requirements? Do you have special product or raw material storage needs? What are your growth plans for this product and future products?

In cases where the contract manufacturer has been in business a long time, is successful and has a list of successful partnerships, they might ask for information beyond these common questions. Some items you should be prepared to present might include: gold standard, or target, product; finished product specifications with limits of acceptability; raw material specifications (not just certificates of analysis [CoAs]); process instructions with control limits and release specifications; and a sampling plan.

Next Question: Who Owns the Formula?

In my experience, it is always better for the brand owner to own the formula. The brand owner is ultimately accountable for the product in the marketplace (not the contract manufacturer), so knowing everything there is to know about your product is the best defense in the event of a recall. A brand owner that formulated the product is in the best position to determine product acceptability. Many brand owners have the contract manufacturer formulate their product; however, formulating and sourcing raw materials yourself can strengthen your position.

You’ve Selected and Vetted a Contract Manufacturer, Now What?

Next up is to watch as the contract manufacturer makes a test run of the product. It might be benchtop, pilot or production-scale, but it’s critical to be there for that run to ensure it is done to specifications.  Remember, the brand owner is the expert on the product. The brand owner knows what to look for and is the only one who can call product quality at this stage of the relationship. Once the scale-up is done, the next step is to work out a quality agreement with the contract manufacturer. A quality agreement, different than a supply or manufacturing agreement, is a document that sets the standard by which the product will be manufactured and spells out the quality/regulatory requirements that need to be maintained to manufacture the product. 

It's Time for the First Production Run!

The brand owner should be present for the first production run, or at least be able to monitor it in real time, to watch the first product come off the line. Is it within specification? If not, does the quality department hold production until it is corrected? Are samples being pulled at the appropriate times? Are batch records being filled out during production? Are the in-process tests being completed to monitor quality during the batch? Are finished product tests being run and recorded? There are many items to look out for during those first few batches. Being on hand will help ensure the product is as expected and the contract manufacturer feels comfortable making in-spec product every time.

That’s all There Is to It, Right?

Absolutely not! Just because that first batch looks good doesn’t mean things won’t drift as time goes by.  One thing I’ve learned in my years of process engineering is every process will drift toward its easiest run state. It is imperative to schedule regular product reviews with the contract manufacturer where they pull samples from each batch made since the last check to compare quality as time progresses.

A Final Word on Communication

Keeping involvement high throughout the partnership is key to a successful relationship. Schedule regular meetings with the contract manufacturer, do product checks, have an annual meeting with the management team to review orders and set the stage for the following year’s production. Throughout every aspect of the brand owner/contract manufacturer partnership, frequent communication is the one, and only, way to ensure the right product every time, and the contract manufacturer will appreciate the care you show for your product.

Learn more about the vetting a potential contract manufacturing partner from Kurt Schneider during the “Contract Manufacturing Roundtable: How to Foster a Successful Partnership” session on Saturday, Oct. 19 at 8:30 a.m., at SupplySide West in Las Vegas. This session is underwritten by Sora Laboratories and Nutrasis.

Kurt Schneider is the president of Tech Bridge West. He has worked in the consumer goods industry since 1986. Schneider’s career has spanned many areas, including product/process development, quality/regulatory and manufacturing/operations. He has helped companies accelerate product launches, comply with an ever-increasing number of rules and regulations, and optimize contract manufacturing processes in numerous fields—from consumer packaged foods, dietary supplements and nutraceutical ingredients to pharmaceutical products and animal nutritional products. Schneider’s understanding of the contract manufacturing relationship is born from many years of guiding the process from both sides, customer and contract manufacturer.