At FDA Compliance Simplified we enjoy working with companies of all sizes. Some of our clients are brand owners but not manufacturers. They team with contract manufacturers to produce shelf-ready products. This can sometimes make it hard to get the information we need to ensure that their ingredients, claims, and labels fully comply with FDA regulations. One of our collaborators, Generation CPG, often sees the consequences of not choosing the ideal manufacturing partner in their work helping brands launch and grow. The article below, from Generation CPC Co-Founders, Luke Penney and Jess Craven provides key factors to consider when choosing a manufacturing partner.
Generation CPG’s #1 Recommendation for Product Development:
Identify your manufacturing partner early!
Most brands that we work with do not self-produce. Instead, they outsource the manufacturing of their products to a contract manufacturer (“CM”). Therefore, one of the biggest mistakes we often see made during the product development (“PD”) process, by both emerging and established brands, is not identifying the contract manufacturing options early enough. Not gathering enough insight into the CM landscape and what capabilities may exist potentially leads to the creation of the dreaded product development “Unicorn”: A beautiful, mythical creature that, unfortunately, never becomes a production reality.
Too often, brands have come to us having already spent enormous amounts of time and money creating an innovative new product only for us to deliver the bad news: The manufacturing capabilities to produce their product do not currently exist in the CM landscape. When this happens, it can push timelines out, increase additional development costs, and worse, it can lead to new concepts needing to be significantly redeveloped or abandoned altogether. To avoid this, it is critical to fully understand the CM landscape before you finalize your product development.
How can you ensure you don’t fall victim to Product Development Failure?
See below for our Top 10 Considerations to review when researching potential CM’s for your product(s):
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Process & Equipment.
At a very basic level, does the CM have the capabilities, experience, and equipment necessary to manufacture your product (e.g. kettles for your hot-fill sauces, extruders for your puffed snack, baking lines for your innovative cookie, etc.). And importantly, do they have experience producing your product type or using your desired production methods? It is also important to understand that formulators often use small-scale lab equipment during the PD phase that does not perfectly represent full-scale production. Therefore, it is imperative that the brand works early in the process with potential CMs to attempt to understand their capabilities in order to replicate a scaled production environment to the best of their ability, otherwise brands run the risk of creating something in the R&D lab that cannot actually be produced at scale.
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Minimum Order Quantities (“MOQ”).
Confirming the MOQ of any potentially viable CM is incredibly important to gather from the start. Too often, we’ve seen brands identify a CM that can produce their product(s), but their MOQ is 10x what the brand can commit to, thereby rendering the CM non-viable. Make sure to have a clear understanding of the production quantities you are able to commit to and work to match that with your chosen CM’s MOQ requirements.
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Packaging.
Most CMs’s filling and packaging lines are set up to handle specific formats and sizes of packaging (e.g. by type of material, shape, closure style, etc.). Understanding what primary and secondary packaging options potential CM’s currently offer is important data to gather during your research. If a chosen CM does not have your desired packaging capabilities, ask them what the cost would be to upgrade their lines or install new lines to achieve your desired packaging format, assuming you, or they, are willing to invest in the capital expenditure.
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Team.
Who are the people who will be producing your product? Do they have the expertise needed? Are they understanding, thoughtful people? Are they responsive? Remember, your manufacturing partner will be one of the most important, if not the most important, relationship your brand will have, so make sure to work with a team you are comfortable with and trust. Also remember that it is a two-way relationship, and the CMs will be evaluating you as much as you are evaluating them, so if you don’t treat them as true partners with respect and kindness, you may find you have limited manufacturing options.
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Facility Certifications.
Most large retailers or distributors require brands to produce their products in a Global Food Safety Initiative (“GFSI”) certified facility (e.g. Safe Quality Food (“SQF”) or British Retail Consortium (“BRC”) certified). Regardless of how you plan to sell your products (Direct-to-Consumer or Business-to-Business) brands should confirm, at a minimum, that their production facility undergoes a regular third party audit, follows Good Manufacturing Practices (“GMP”), and creates Hazard Analysis Critical Control Points (“HACCP”) plans for the products it produces.
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Product Certifications.
What certifications do you want your products to carry (e.g. Organic, Kosher, Gluten Free, etc.)? Not all facilities can meet the standards or administrative requirements necessary for your product to achieve the aforementioned certifications, so confirming what certifications are possible with any potential CM is key.
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Pricing – Tolling or Turnkey.
What is the CM’s preferred pricing structure? If they are turnkey (purchasing raw materials on your behalf) do they operate on a cost-plus basis? Will they share any cost savings with you? If they operate on a tolling model (the brand manages the raw material purchases and the CM charges for receiving, labor, overhead, etc.) does your team have the bandwidth to manage your supply chain?
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Ingredients
Are you using an innovative, hard-to-source ingredient as a key differentiator? If so, confirm that you can identify a strong source, as well as backup sources. Determine that it is an ingredient that your CM can work with and that they approve your chosen supplier. Can the supplier provide the necessary Quality Assurance (“QA”) documents, Certificate of Analysis (“COA”), and specification sheets?
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Allergens.
Does your product contain any allergens restricted by the CM facility? Similarly, does the CM produce products with any allergens that you want your product to be free of? If so, are you open to labeling your product with “Made in a facility that also processes tree nuts,” etc.?
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Contract/Term/Agreement.
What does the CM offer in terms of a contract or agreement? Are you comfortable with their terms and conditions? What are their payment terms? Who is liable if the product is non-compliant? Make sure to do a thorough legal review of all agreements before moving forward with any potential CM to ensure you and your brand are protected and you feel comfortable with the terms you are committing to.
Incorporating these tips into your Product Development process will give you a better chance of success and hopefully save you time and money along the way!
Luke Penney & Jess Caven, Co-Founders of Generation CPG
Generation CPG is a consulting agency that helps launch the next generation of products in food, beverage & wellness CPG, by supporting a brand’s commercialization, operational, and supply chain needs through customized expert level service offerings and advisory support.
Learn more at: generationcpg.com. © 2023. Generation CPG LLC.