Are You Working With the Right Contract Manufacturing Company?
10/1/2018
Experiencing problems with your co-man?
It’s important that you are working with a contract manufacturing company that is a good match for your company. While this may sound obvious, I want you to ask yourself two questions:
How much do I really know about my co-man’s business?
How much does my co-man really know about my business?
Let me explain.
What Type of Business Are You?
Are you a volume mover? A premium producer? Corporate? Mom and pop operation?
How far ahead can you predict demand and place orders? How often do you need orders filled? What volume are you producing? Do you need help from your co-man with storage and transportation, or do you have third party or corporate transportation and storage arranged? How hands on do you expect to be with production? Ingredient sourcing?
What Type of Contract Manufacturing Company Is Your Co-Man?
Once you’ve determined what type of business you are, you need to figure out if you are with a suitable co-man. I’m not talking about how reliable or reputable your co-man is; I’m talking about size. Level of involvement and flexibility. Capacity. Expectations.
Why A Mismatch Hurts Everyone Involved
If you are a small new food product company and you are working with one of the largest contract manufacturers, you are going to end up last in priority. However, if you are a fast-growing company and are working with a mom-and-pop co-man, you may outgrow their capacity and have to pay to keep the co-man up to speed (new equipment, bigger capacity, more employees on the lines). If you have a lot of order changes and need a lot of attention, you want to make sure you are with a co-man that can provide that level of service.
A mismatch is frustrating for everyone. Remember, co-mans are people, too. Manufacturing can be a thankless business. Make sure you treat each other with respect and figure out if your partnership is mutually beneficial.
Need Help Figuring It Out?
As you evaluate your contract (please tell me you have a contract) and performance metrics (and please tell me performance metrics are specified in that contract), ask yourself if you settled on a co-man that isn’t quite right for you. You may need to re-negotiate an existing contract or consider moving to a different co-man if you and your co-man are mismatched. It’s better to take your lumps now and have a profitable long-term solution than stick it out in a bad situation (and possibly go out of business if the current situation is not favorable).
Click here to read more posts in this series about improving your relationship with your contract manufacturer. If you have any questions or need help with an existing or potential contract with a co-man or co-packer, give us a call or shoot us an email. We’ll be glad to help!