Issues to Consider When Selecting a Contract Manufacturer

Issues to Consider When Selecting a Contract Manufacturer
by Eric Barber

As the natural products industry grows, more companies are looking to offerdietary supplements into various supply channels. However, many of thesecompanies are avoiding the investment in production capabilities by workingdirectly with a contract manufacturer. Other large companies may choose acontract manufacturer to run only particular lines or products.

There are a variety of considerations for companies searching for contractingmanufacturing services. Among these are the company's quality control/qualityassurance (QC/QA) practices, the consistency of production, customer service,flexibility and cost factors.

Quality Control/Quality Assurance

One of the primary issues in the dietary supplement industry is quality. Thisgoes back to the type of processes that manufacturers and suppliers follow toensure the highest quality is given in the end product.

Clients searching for contract manufacturing services should assurethemselves that their selected operators comply with all production standardsset forth by the government and adhere to strict Good Manufacturing Practices (GMPs).In the dietary supplement industry, the Food and Drug Administration (FDA) hasnot yet promulgated GMPs specific to this industry; thus, manufacturers ofdietary supplements must follow food manufacturing GMPs. There are alsovoluntary GMP programs in the dietary supplement industry, as well as a numberof cGMP proposals that can give a guideline of the types of steps manufacturerscan and should take to assure consistency in production.

Along with GMPs, clients should ask about a company's Standard OperatingProcedures (SOP). These standards, which should be set out in writing, set thebaseline for in-house manufacturing and production. This ranges from cleaningprocedures to how to run equipment. It may also include the testingresponsibilities of the in-house operation and any off-site laboratories.

Testing is a crucial area of manufacturing. Contract manufacturers shouldtest all raw material ingredients before they are released into inventory toassure purity and quality of the ingredient (that it meets requested specs). Allfinished products should be run through microbiological testing to assure theproduct is safe and free of contaminants. Contract manufacturers should beaccustomed to making products according to specification and label claim. Theseissues all come into play with the liability and claims being made (see relatedstory, page 20).

Consistency

Having GMPs, SOPs and a solid quality control program in place are importantsteps in assuring consistency of product. A quality contract manufacturer shouldguarantee exact reproductions of a product each time it is manufactured. Thismeans the company follows the specs requested and takes the steps to assure theintegrity of the ingredients sourced. In addition, contract manufacturers shouldproduce consistent lead time that does not cause the client out-of-stock orother inventory issues.

Customers are looking for companies with credibility. They want to be given apromise of value at the beginning and a commitment to supplying value. Inaddition, a customer has the right to expect a contract manufacturer to know theproducts and/or services it is selling. Without knowledge of the equipmentabilities, formulation options or reliable, consistent follow up, how can acontract manufacturer hope to meet the needs of a valuable client?

Customer Services

What it comes down to is customer service. A quality contract manufacturershould facilitate a relationship with each customer. Through this ongoingrelationship, a customer and manufacturer establish trust. Trust is notsomething that is given freely, but is earned with ongoing reliable business andsupport. When selecting a contract manufacturer, clients should look for abusiness that listens to their needs and will respond accordingly.

What types of expectations should you hold for customer service? First, thereis a right to expect that your contract manufacturer knows your business; thisassists you in serving as a source of information and guidance, resulting inteamwork vs. piecemeal projects. Contract manufacturers should have an attentionto detail, both during and after the project. Follow up means ensuring that theproduct was done right and met the customer's needs every time.

As the relationship develops, contract manufacturers can supply additionalinformation on the changing market, recommending improvements to existingproducts and offering suggestions for line extensions or new options. Stayingaccessible to the client reassures both parties that the relationship is a longterm one. This builds customer loyalty, a priceless commodity in a rapidlychanging industry.

One specific part of customer service is staying flexible. A manufacturershould have the flexibility to change with a customer's needs. In a symbioticway, a manufacturer and client grow together. A quality manufacturer can alsosupply flexible solutions to marketing challenges, whether time crunches or newsupply needs.

Cost Factors

A discussion of choosing a contract manufacturer would not be completewithout looking at the cost issue. When weighing choices, clients shouldconsider whether a manufacturer could provide fair pricing without sacrificingquality, and whether it offers a consistent pricing structure. Asking forreferences of suppliers can draw out whether the manufacturer has a goodrelationship with the ingredient chain members, a valuable resource whensupplies are tight. This also can show if the contract manufacturer is managingthe raw material sourcing to create more effective buying and leveraged buyingpower.

When reviewing GMPs, equipment investments, testing procedures and more, alsoconsider whether the facility is run as efficiently as possible, reducing coststo the customer without reducing quality standards. Part of being a qualitymanufacturer is maintaining financial stability, ensuring that the business willbe viable down the road. This includes justifying price in terms of value.

Ultimately, it comes down to the value in a relationship. Value is thecombination of price, quality and service. When all the factors are workingharmoniously, the relationship between contract manufacturer and client resultsin quality products at reasonable prices, where the consumer is the ultimatewinner.

Eric Barber is national sales manager with Valentine Enterprises Inc., acontract manufacturer based in Lawrenceville, Ga. He can be contacted at (770)995-0661 or [email protected].