I was sitting here on a Sunday morning in the cold winter of Minnesota when I got a text from my wife that Kobe Bryant had died. Living in California during his heyday with the Lakers, I watched him grow from a child prodigy to one of the best players in the history of the NBA, to a lost person accused of a terrible crime, to a more mature player with more championships, to a father—and then finally, after he retired from the game—to a mentor and life coach to hundreds of people, hundreds of thousands when you consider all the people worldwide he touched through his words and his wisdom.
As I sat there trying to write an article on vetting contract manufacturers, I wanted so desperately to draw some parallel to Kobe’s life after basketball. And, even with those two topics seemingly worlds apart, I found a common thread in the practice of positive communication. Kobe spent his final years giving back to the sport, and life, that had given him so much. And he did it by caring about what the person he was communicating with had to say. He listened, he encouraged, he coached, he cheered and he taught. Although that was a sad day for me even though I never met Kobe, what I learned from him can help you as well as you prepare to vet your contract manufacturer.
If you decide to have someone else manufacture your product, your relationship with the contractor 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. The biggest guideline is positive communication.
By positive communication I mean frequent, constructive discussions with your contract manufacturer that start with the vetting process. If you take a step back and look at the ultimate objective of the contract manufacturer as well as the brand owner, it is to have a successful business by whatever metric you choose. How you treat your customers, and potential customers, will go a long way toward determining your success. While it seems like such a basic principle, many of these vetting processes go south simply because of combative communication. Understanding what the other party needs—and providing the most accurate and honest information possible—will set the stage for a positive experience. Be prepared to share details of your business that you might otherwise think are “proprietary” or confidential. If you don’t feel comfortable sharing this information, you’re not ready to build a relationship with a contract manufacturer. With that in mind, let’s dig a bit into the due diligence process.
Conducting due diligence
The first thing to do after identifying a potential contract manufacturing partner is to identify if they are a good fit. Numerous considerations can help assess this:
- How long have they been in business?
- Do they have references you can talk with?
- 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
- Tolling charge
This is by no means an exhaustive list, and good tools are available to help with this pre-screening activity. One of the best is a supplier pre-approval questionnaire. This document goes through all the pertinent questions mentioned, as well as getting into the details of compliance programs, quality procedures, food safety plans and the like. It requires supporting documents in each section, so you know 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 of you, so it is best to have it all ready when you meet them for the first time. Some of the questions they may ask 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?
- Any special product or raw material storage needs?
- What are your growth plans for this and future products?
In cases where the contract manufacturer has been in business for a long time, is successful and has a list of successful partnerships, they might ask for information beyond the common items listed earlier. Some of the items you should be prepared to present may 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
- Sampling plan
Every one of these questions, whether you are asking your potential contract manufacturing partner or they are asking you, demands a well-thought-out answer, as well as an understanding of why they asked it. If you take the time to think through the answers to these questions ahead of time, and understand they need to know these things to determine a correct fit, then positive communication will help both parties get through the process to determine a good fit.
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.