December 16, 2013
Suppose a purchasing agent had a product that contained 35 ingredients. She now has the choice of either going out to 35 different vendors to purchase individual items, or, going to one vendor and cut only one purchase order. This is the power of the premix.
Yes, there is a premium to pay, but ultimately a premix can lead to cost savings and be a much more expedient process, saving time and paperwork. More companies are choosing the premix route, and this has led to an influx of suppliers to provide a wide variety of premixes. The good thing is more competition has led to better prices for the purchasing agent; the challenge is to find the right supplier the one who is more vertically integrated with the ingredients, has the right equipment to do the job, and whose analytical capabilities will let the quality control (QC) director sleep better at night.
I have spoken to several purchasing agents who pretty much agree the cost of cutting a purchase order is approximately USD $70.Let's do the math working the original 35-ingredient formula: for 35 ingredients this means a cost of $2,450versus a $70 premix invoice. Further, doing it the more expensive way, for many of those 35 ingredients, the purchasing agent must buy full drums, even when only a partial is needed for production of the particular formula. The balance of that drum either goes back into inventory or is disposed of (if there is no need for the extra material.)
Conversely, if using a premix, the buyer only gets the exact amount of the ingredients it needs, and, a bonus:, it's already blended into the formulano tailings for inventory. Also, if the premix supplier is vertically integrated with its sources, it will provide an attractive price for each ingredient. The influx of new premix suppliers during the past few years has created this benefit . Competition does that. Additional ingredient cost savings and additional negative inventory holding costs seem to make the premix route more attractive. And, if production requirements only need 3,050 kilos of material, a premix will give only 3,050 kilosthe exact amount for production. No additional inventory to take up space and waste.
Because a production department now has a fully blended product, it dramatically saves time and money as the company no longer must mill, blend or lose yield that frequently occusr when a company does its own in-house premixing.
The new premix should come with a full certificate of analysis (CoA) confirming a uniform blend. The cost savings here go to a premix supplier that has its own in-house
analytical lab. Some premix suppliers send the blend for full analysis while others don't. In the former case, a company must pay an additional QC third-party mark-up that is built in to the supplier's cost.
After considering the premix route, a company must find a supplier it is comfortable with. As with everythinga cheaper price doesn't always mean a better price.
Blending ingredients is an art and requires tremendous knowledge of ingredient composition and behavior. Not all ingredients have the same mesh profile. Not all ingredients behave well next to each other. And one piece of equipment may not be sufficient for the blending of all ingredients. A good premix partner will have several types of blenders on-site, each with its own specialty; there are many types of blenders: tumble blenders, V-cone blenders, ribbon blenders, double-ribbon blenders, extrusion and fluid bed, just to name a few. A premix partner will examine a formula to make sure that it achieves the best uniformity of blend and the right bulk density for a product.
Some have said giving up in-house premixing is like giving up a first-born child. But it frees up production, it decreases inventory costs and allows more efficiency in the production line.
Realize too that the new cGMPs (current good manufacturing practices) and more frequent FDA audits are positive guidelines for keeping the suppliers in compliance. Most now have third-party audits from NSF International or other certifying groups, so it's best to ensure a premix partner is in compliance.
Remember a brand owner's company name is on the finished product. It will want to partner with a supplier who will stand behind its ingredients and the finished product, hopefully sharing the success.
Tim Bray is vice president of Pharmachem Laboratories Inc. Kearny, NJ.
Originally published in INSIDERs November/December print issue.
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