The Limitations of Contract Juice Manufacturing

Synergy Food Group Operations Director, Adrian Hall explains the limitations of Contract Juice Manufacturing so that you can understand and find the ideal Contract Juice Manufacturing or Private Label Beverage Manufacturing partner for your company.

Synergy Food Group Operations Director, Adrian Hall explains the limitations of Contract Juice Manufacturing so that you can understand and find the ideal Contract Juice Manufacturing or Private Label Beverage Manufacturing partner for your company.

Now it’s not always roses, so it’s important to know what you’re getting into so you can make the right decision about whether it’s right for you.

Really working with a contract manufacturer, the main limitation that you’re going to find is control.

If you’re a control freak, you’re going to find it very, very hard to let go of this little baby that you’ve nurtured and created and designed.

When you’re dealing with a contract manufacturer, that control is basically all going to be out of your hands.

You’re not going to be able to control when they make your product. Especially when you’re small and you’re just starting off, you’re likely just going to be allotted a time that suits the contract manufacturer when to make your product. And they’re going to focus a lot more of their time on the bigger customers.

That can make things really challenging for you.

If you’re needing an order or you’ve got a quick order that you need to get out, if you’re just bumped to the back of the queue and you’re left without stock, that can do quite a lot of damage to your brand.

The other thing that you are going to lose control over are costs.

We at Synergy Food Group had an experience last year in our business where one of our raw materials went up by 400%, which was unheard of.

We had to pass that cost onto our customers and then they had to then try and work that, pricing into their costs.

If you were manufacturing that product yourself, you might have a little bit more ability to manipulate how you are going to deal with that situation.

Maybe you substitute that ingredient out for something else, or you use more of an inferior product, if that’s what it takes to meet the cost that you need to work with. But it’s definitely something that you need to keep in mind.

The fact that if someone else is purchasing all the ingredients to make your product, they really have full control over what they’re going to charge you for it at the end of the day.

You need to also understand that as a customer, to a contracting manufacturer, you could potentially just be treated as a number.

As I mentioned earlier in the early phases, you’re still building up your business you’re still trying to find your feet.

A contract manufacturer is going to give most of their time and their production slots to the guys that are ordering huge, huge volumes. That can leave you with no stock to be able to sell to your customers, if you haven’t managed your timings properly. So be aware that, you’ll need to know what their lead times are.

You’ll need to know how much stock you’re holding, so that you never get stuck and never get put into those situations.

You also want to make sure that your manufacturer is aware of the growth that you’re expecting as a business.

You might find that you’re working with a company who’s really, really good while you’re small, and they’re able to help you develop products and create new ideas, but then as you scale and start to become bigger and bigger, perhaps this company’s, not the right company to work with, therefore you’re going to have to have restart that whole process, working with a new business.

So make sure you understand what their capabilities are so that you don’t get stuck in that situation.

The final and the biggest, potential limitation that you need to be aware of when you’re considering whether contract manufacturing is right for you, is what happens if something goes wrong?

Let’s say you’ve been working with somebody for a couple of years, and then, you get a potential bad batch that ruins the reputation of your company and you decide that you don’t want to work with that contracting manufacturer anymore.

Where does that leave you?

Well, you’ve got a great brand. You’ve got a cool website. You’ve got a great product, but you’ve got nobody to make it for you. Now finding a new contract manufacturer is not impossible, but it’s going to take some time and that may leave you with a window where you actually don’t have any product to sell to customers.

So really have a clear understanding of what rules you want to set in place by working with them and making sure that you can avoid those situations because that can probably do more damage to your brand than anything.

And finally, and probably most importantly…

What happens if a contract manufacturer and yourself come to some disagreement during the relationship?

Perhaps you’ve been working with them for a week or a month or a year, and then something goes terribly wrong and one of the parties decides that perhaps it’s best not to work together.

That’s going to leave you in a really tricky situation where you’ve got your brand, you’ve got your product and your pretty website, but you actually don’t have a product because you’ve got nobody to make it for you.

Make sure you have very clearly defined expectations, rules and guidelines before you jump into bed with working with a company so that these things don’t occur because they can do more damage to your brand than probably anything.

So in summary, yes, there are some limitations to contract manufacturing, but definitely the benefits far outweigh them.

A contract manufacturer is going to take a lot of pressure off of you as a business, starting up, trying to scale and it’s definitely what we would recommend investigating.

If you’d like to hear how we might be able to help, we’d love to hear from you, contact Synergy Food Group and let’s see where you are now and see how we can take you to where you want to be.