10 Questions to ask your Contract Manufacturer
Selecting the right contract manufacturer can be a daunting process. With so many important areas to consider, it can be difficult to know where to start. That’s why we’ve put together a list of the essential questions you need to consider when negotiating with a potential manufacturer.
Who do you currently co-pack for?
While they are unlikely to tell you outright which brands they are working with, it is still worth asking the question. They should be able to assure you at least that there are no conflicts of interest. It is also worth discussing whether they have any restrictions relating to these relationships as this could pose an issue further down the line, particularly if you are considering NPD.
What are your packaging capabilities?
This should be one of the first questions you ask. If you’re looking for a Tetra Pak solution and you’re talking to a manufacturer with just a bottling line, unless they are willing to make a significant investment in time, money and space, you may well be wasting your time.
What are your product development capabilities?
Some manufacturers have product development expertise they will allow you to utilise, while others will expect you to come to them with a final recipe. So, it is always worth asking about their product development capabilities so you know whether you need to outsource this to a third party or to the co-packer.
What accreditations do you have?
If you are looking to secure a listing with a major retailer, it is likely you will need a factory with BRC accreditation, or something like IFS. Don’t just assume all manufacturers have this because it’s not always the case, especially if they have been supplying small volumes up to this point. It’s also worth delving into what standard of BRC or IFS they have so you can make an informed decision about whether or not to proceed with them.
What allergens do you handle on site?
For many manufacturers, handling allergens is something they want to avoid at all costs, so if you have a recipe that contains any of the 14 listed allergens, it is definitely worth mentioning this up front.
Equally, if you have a product which you’d like to claim is ‘allergen free’, make sure you check the factory isn’t handling any other allergens.
What are your MOQs?
All large manufacturers have Minimum Order Quantities that will need to be met for them to consider manufacturing your product. Volumes below this are likely to be commercially unviable. MOQs are very important as they will determine unit cost estimates.
If you are a brand new to the market, it can be difficult to persuade a manufacturer that you are going to be able to meet their MOQs. You’ll need a comprehensive sales forecast detailing the listings you’ll expect to get and when, and an estimate of the number of units you expect to sell per store per week in order to come up with a realistic figure for the volumes you’ll require.
If you are unable to meet your manufacturers MOQs, it is worth looking at smaller manufacturers who are often more agile and better able to deal with smaller runs.
How are you going to get finished product shipped?
If your manufacturer is already supplying some of the accounts you expect to supply there are clearly supply chain and technical synergies, and with that, savings to be made on logistics costs. It is worth asking about this so you can get a clear picture of costs up front.
Who is going to take care of raw material procurement?
Depending on the type of product, some manufacturers will take responsibility for procurement for the majority of raw ingredients, while others may expect you to take care of this yourself. It is worth finding out what is expected of you as it takes a good understanding of commodity markets to ensure you are getting the best price.
Who is responsible for a recall?
The prospect of a product recall rightfully fills both manufacturers and brands with dread. Although you’re unlikely to be thinking about this when embarking on a relationship, it is worth discussing what would happen in this scenario during commercial discussions. It’s a scenario with a low likelihood but a huge impact and as such it needs an open, upfront conversation.
Do you have any references for us to contact?
Choosing a contract manufacturer is a big decision. You wouldn’t hire an employee without a reference so why should you select a contract manufacturer without any? Getting the ‘low down’ on their reputation in the market is usually illuminating. In addition, it is always worth asking whether you could speak with any of their existing or previous customers just to talk through their experiences.