Three things brands need to know about contract manufacturing

Here's a short list of things to look for when searching for a contract manufacturer. Nailing these aspects of that relationship down early can save big headaches later.

Hank Schultz, Senior Editor

December 27, 2023

3 Min Read

Contract manufacturing is ubiquitous in the dietary supplement industry. But knowledge about how to vet those manufacturers is not. Here’s a quick list of ways to avoid the common pitfalls of this get-to-market-fast strategy.

Many brand holders are loathe to admit their products are produced by contract manufacturers.  They are also often circumspect when it comes to naming who those manufacturers are.

Some of this comes down to protecting trade secrets. But this tendency toward confidentiality also seems to be motivated by a belief that if consumers know a product was made by a third party, they might consider it to be of lower quality.

That circumspection has led to a lower than optimal level of awareness about what’s important when looking for a quality contract manufacturer. The high profile case of Goli Nutrition vs. Better Nutritionals is a poster child for what can go wrong if a brand doesn’t get it’s contract manufacturer relationship right.

Culture of transparency

Experts contacted by Natural Products Insider said one thing to look for above all else is whether the contract manufacturer is willing to be transparent about its business processes. 

“You need to make sure they have that as part of their culture, not only their business model,” said consultant Scott Steinford, who has been an executive at finished products companies as well as a contract manufacturing firm.

This is especially true as the responsibility for legal compliance for the products in terms of labeling, production documentation and so forth rests firmly with the brand holder, according to federal regulations.  If a contract manufacturer is reluctant to share those records, that should raise a red flag.

When FDA issued its GMP (good manufacturing practice) compliance guide for small firms (those with fewer than 20 FTEs, or full-time equivalents), the agency reiterated that the brand holder is responsible for knowing how a product has been manufactured and tested so that the brand holder can verify it meets specifications and is safe to distribute.

Testing protocols

That brings up the second thing to investigate: How does the contract manufacturer decide when a product meets specification?  What analytical techniques does it use to test the products it manufactures, and does it do that in an in-house lab or does it farm that out to a third-party lab?  If the latter is the case, how is the quality of that lab’s work verified?

And further, how does the manufacturer vet its incoming raw materials? Does it test every batch, or does it do skip lot testing? The latter can meet the letter of federal regulation, but only when the entity doing the skip lot testing has a well-developed plan for doing so.  That usually involves a long-standing relationship with a particularly well-trusted supplier.

Creativity in solving problems

Finally, observers say that feeling out a company’s trouble shooting and problem-solving abilities is paramount.  Hurdles will invariably arise, and a creative contract manufacturer will find ways to fix issues while at the same time avoiding quality shortcuts.

Along those lines, it behooves brand holders shopping for contract manufacturers to investigate the supply relationships of those firms.  Does the company have multiple sources of supply for the key ingredients in a given formula?  Or would a problem at a single supplier mean a product order will be delayed, which could put the brand holder into a critical cash flow crunch?

Getting the contract manufacturing relationship right can mean brand holders (especially smaller ones) can get to market quickly and can be more agile in responding to market shifts. Getting it wrong could mean getting caught up in a major recall fiasco, as happened to hundreds of brand holders during the 2019 ABH debacle.

About the Author(s)

Hank Schultz

Senior Editor, Informa

Hank Schultz has been the senior editor of Natural Products Insider since early 2023. He can be reached at [email protected]

Prior to joining the Informa team, he was an editor at NutraIngredients-USA, a William Reed Business Media publication.

His approach to industry journalism was formed via a long career in the daily newspaper field. After graduating from the University of Wisconsin with degrees in journalism and German, Hank was an editor at the Tempe Daily News in Arizona. He followed that with a long stint working at the Rocky Mountain News, a now defunct daily newspaper in Denver, where he rose to be one of the city editors. The newspaper won two Pulitzer Prizes during his time there.

The changing landscape of the newspaper industry led him to explore other career paths. He began his career in the natural products industry more than a decade ago at New Hope Natural Media, which was then part of Penton and now is an Informa brand. Hank formed friendships and partnerships within the industry that still inform his work to this day, which helps him to bring an insider’s perspective, tempered with an objective journalist’s sensibility, to his in-depth reporting.

Harkening back to his newspaper days, Hank considers the readers to be the primary stakeholders whose needs must be met. Report the news quickly, comprehensively and above all, fairly, and readership and sponsorships will follow.

In 2015, Hank was recognized by the American Herbal Products Association with a Special Award for Journalistic Excellence.

When he’s not reporting on the supplement industry, Hank enjoys many outside pursuits. Those include long distance bicycle touring, mountain climbing, sailing, kayaking and fishing. Less strenuous pastimes include travel, reading (novels and nonfiction), studying German, noodling on a harmonica, sketching and a daily dose of word puzzles in The New York Times.

Last but far from least, Hank is a lifelong fan and part owner of the Green Bay Packers.

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