Are you considering the outsourcing of production to a third party manufacturer for the goods that you are selling? It is an increasingly popular option, and just about all the big brands nowadays do it in one way or another. The latter offers companies numerous advantages such as decreasing overall expenses and enabling a business to focus on core strengths like product design and marketing.
It’s also a crucial strategy for business looking to shrink time to market–an essential factor to consider in highly competitive markets like the food industry. However, what are the downsides that are contracting out business require to be familiar with? This post has a look at some essential issues companies must think about, plus what they can do to alleviate the danger.
- Losing control over your products
- Contracting out always suggests losing some element of exposure and control over the production procedure. This has some implications for the company, including:
- Loss of vital understanding and skills around production techniques.
- Supply chain issues associated with poor quality or questionable materials
- Increased vulnerability to issues in the contract maker’s facility, which can
- increase costs and extend production schedules.
Quality Issues
One huge implication of contracting out production procedures is a loss of control over the quality of products. It’s a crucial factor to consider before you hire a contract food manufacturing company. After all, quality problems can threaten the health of customers (and ultimately damage the outsourcing business credibility).
Copyright Risks
According to the National Criminal Offense Avoidance Council, more than 10% of all food companies are fake. In some countries, that number approaches an incredible 70 %. Counterfeiting is a substantial intellectual property concern, and business is appropriately worried about sharing their info with contract makers.
Competition is another significant danger. As many businesses have seen, providing contract producers access to copyright isn’t just a matter of dripping secrets to rivals– the contract producer itself may just become your rival. This is particularly a huge problem for food companies and even large pharmaceutical businesses.
New Item Introduction (NPI)
When introducing a brand-new product to the marketplace, business requirements to have a firm prepare for interacting elements and expectations to contract producers to prevent vital errors.
That’s because new items often include several parts and subassemblies, leading to multiple sub-projects with many moving parts. Last-minute design changes, manufacturing hold-ups and expense overruns can all torpedo your product rollout, putting your investment (and your relationship with the contract maker) at threat.
How to Safeguard Your Company?
First and foremost, you ought to concentrate on reinforcing your Supplier Quality Agreement (SQA), which describes quality and compliance responsibilities for both parties. When you have a firm agreement in place– one that attends to critical elements like copyright ownership, shipment commitments and liability for failures–, you can begin exploring how to use your existing Quality Management System (QMS) to manage and track the contract manufacturing procedure.
Applications focused on improving supplier quality are particularly helpful, enabling you to extend your business’s quality objectives down the supply chain, promote regulatory and essential compliance and monitor supply chain dangers.
Lastly, your business ought to put the risk at the centre of the decision-making procedure. Once again, this is a method that’s best supported via the QMS, utilising quantitative Risk Assessment tools like threat matrices and choice trees that can be incorporated into numerous applications.
When we discuss the obstacles of contract manufacturing, most of those challenges boil down to run the risk of mitigation. At the end of the day, how your company approaches those dangers is what determines whether contract production presents a liability or a competitive advantage.
