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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 offer dietary supplements into various supply channels. However, many of these companies are avoiding the investment in production capabilities by working directly with a contract manufacturer. Other large companies may choose a contract manufacturer to run only particular lines or products.

There are a variety of considerations for companies searching for contracting manufacturing services. Among these are the company's quality control/quality assurance (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. This goes back to the type of processes that manufacturers and suppliers follow to ensure the highest quality is given in the end product.

Clients searching for contract manufacturing services should assure themselves that their selected operators comply with all production standards set forth by the government and adhere to strict Good Manufacturing Practices (GMPs). In the dietary supplement industry, the Food and Drug Administration (FDA) has not yet promulgated GMPs specific to this industry; thus, manufacturers of dietary supplements must follow food manufacturing GMPs. There are also voluntary GMP programs in the dietary supplement industry, as well as a number of cGMP proposals that can give a guideline of the types of steps manufacturers can and should take to assure consistency in production.

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

Testing is a crucial area of manufacturing. Contract manufacturers should test all raw material ingredients before they are released into inventory to assure purity and quality of the ingredient (that it meets requested specs). All finished products should be run through microbiological testing to assure the product is safe and free of contaminants. Contract manufacturers should be accustomed to making products according to specification and label claim. These issues all come into play with the liability and claims being made (see related story, page 20).

Consistency

Having GMPs, SOPs and a solid quality control program in place are important steps in assuring consistency of product. A quality contract manufacturer should guarantee exact reproductions of a product each time it is manufactured. This means the company follows the specs requested and takes the steps to assure the integrity of the ingredients sourced. In addition, contract manufacturers should produce consistent lead time that does not cause the client out-of-stock or other inventory issues.

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

Customer Services

What it comes down to is customer service. A quality contract manufacturer should facilitate a relationship with each customer. Through this ongoing relationship, a customer and manufacturer establish trust. Trust is not something that is given freely, but is earned with ongoing reliable business and support. When selecting a contract manufacturer, clients should look for a business that listens to their needs and will respond accordingly.

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

As the relationship develops, contract manufacturers can supply additional information on the changing market, recommending improvements to existing products and offering suggestions for line extensions or new options. Staying accessible to the client reassures both parties that the relationship is a long term one. This builds customer loyalty, a priceless commodity in a rapidly changing industry.

One specific part of customer service is staying flexible. A manufacturer should have the flexibility to change with a customer's needs. In a symbiotic way, a manufacturer and client grow together. A quality manufacturer can also supply flexible solutions to marketing challenges, whether time crunches or new supply needs.

Cost Factors

A discussion of choosing a contract manufacturer would not be complete without looking at the cost issue. When weighing choices, clients should consider whether a manufacturer could provide fair pricing without sacrificing quality, and whether it offers a consistent pricing structure. Asking for references of suppliers can draw out whether the manufacturer has a good relationship with the ingredient chain members, a valuable resource when supplies are tight. This also can show if the contract manufacturer is managing the raw material sourcing to create more effective buying and leveraged buying power.

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

Ultimately, it comes down to the value in a relationship. Value is the combination of price, quality and service. When all the factors are working harmoniously, the relationship between contract manufacturer and client results in quality products at reasonable prices, where the consumer is the ultimate winner.

Eric Barber is national sales manager with Valentine Enterprises Inc., a contract manufacturer based in Lawrenceville, Ga. He can be contacted at (770) 995-0661 or ebarber@veiusa.com.

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