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Mutually Beneficial Relationships in the Supply Chain

Article-Mutually Beneficial Relationships in the Supply Chain

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<p>The role of contract manufacturers in the dietary supplement space has changed. The law today specifies the contract manufacturer is legally responsible for the quality, purityand potency of the products it makes, and it must comply with the required processes, validations, tests and risk analyses embodied within these federal regulations.</p>

Nutritional products and supplements have come a long way in the past four decades. In the formative years of health food stores and products, many companies were family-based with a passion for “alternative" health care remedies of all sorts. Homeopathics, herbal remedies and tinctures, vitamins, minerals, proteins and all sorts of healthy and organic foods came into vogue.

As people in America migrated off the rural landscape and into offices and factories over the past century, many of these newly-migrated-to-urban-living folks brought along their “farm remedy" preferences. Farmer’s markets, organic produce markets, and visits to the butchers and fishmongers were once common. A lot of the sights, sounds and smells of those days were antiseptically removed when the local market transformed into a “supermarket." The butcher on the corner who would gladly save a couple of bones for dogs suddenly found fewer customers who were busier and shorter on time for conversation.

As the romantic appeal to get “back to the land" bloomed among urbanites, large brands evolved with many products manufactured under contract by companies that offered various capabilities.

Many companies who found their way into the natural products industry did so out of other disciplines. One case is a successful health food store owner in the Marina del Rey area, who was selling bulk seeds, nuts and oils packaging to various stores in his region. Buying in significant bulk and repackaging into more consumer-friendly sizes is one of the key components of contract manufacturing, at least in the food commodity space. This has now largely evolved into big companies having divisions dealing just with natural and organic foods, with sophisticated acquisition, storage, tracking and transportation systems.

The first “supplements" were powdered brewer’s yeast, liver powder and other less-than-savory compounds, with the exception of blackstrap molasses. While those products are still available courtesy of some of the legacy pioneers such as the Bragg’s, Lindbergh’s and Weldon’s, the ever-changing demands of regulation have ushered in a new industry that needs to comply with myriad regulations to promote quality and consistency, reduce risks of harm to consumers, and ensure potencies and purity. This is not easily achievable in a garage or kitchen setting—inspectors from both state and federal agencies have been astonished to find a small facility with antiquated or unsuitable equipment, engaged in building products for our industry. This is not usually well received by the inspectors.

Since the passage of the Dietary Supplement Health and Education Act (DSHEA) in 1994, and the subsequent issuance of the GMPs (good manufacturing practices, 21 CFR 111), the role of contract manufacturers in the dietary supplement space changed. The law today specifies the contract manufacturer is legally responsible for the quality, purity and potency of the products it makes, and it must comply with the varied requirements for processes, validations, tests and risk analyses embodied within these federal regulations. Gone are the days when “close" was good enough.

Consequently, when looking for a good contract manufacturer, brands need to evaluate several key areas:

•             Ensure the company is properly incorporated or organized and is licensed by the appropriate authorities. Failure to have registration documents with state and federal authorities is a good sign to move on to other candidates.

•             Ask for a non-disclosure agreement (NDA), or better yet, have one prepared by competent counsel, and ask the potential contract manufacturer to execute it.

•             Ask for copies of all inspection reports from local, state or federal authorities over the prior three years, and if the firm has been issued any warning letters from FDA, request copies. There are data repositories that have these, including the website maintained by FDA (

•             Ask for certificates of product liability insurance and if the brand can be added as an “additional insured."

•             Tour their production or packaging facilities.

•             Ask to see their laboratory, meet their personnel and review their laboratory certifications; Iif offered, get copies of these documents.

•             Ask the firm to provide audit reports or licenses and inspection reports from non-government entities, such as outside organizations that perform audits, e.g., NSF, USP, UL, EuroFins, etc.

Deciding to go with a contract manufacturer is like deciding to get married. The need for transparency is paramount, given the current complexities of doing business in this regulated world, and with ever changing supply chain members and challenges.

The days of relying on raw material, vendor-supplied certificates of analysis (CoA) are over, and have been for some time. As the legal burden to prove quality and document everything associated with the procurement, handling, processing, storage, packaging and testing is squarely on the contract manufacturer, brands can expect to enter substantial dialogues with quality control (QC) and business people. Quality is not just a saying, but very much an essential requirement in today’s business environment.

Mark A. LeDoux is founder, chairman and CEO of Natural Alternatives International ( Inc., an organization with world-renowned facilities in the United States and Switzerland engaged in the research, design and manufacture of nutritional supplement programs and products for multinational clients.

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