Contract Manufacturing: An Overview

The time, money, and complexity often involved in producing a great product can be overwhelming for suppliers. Not every company is going to start out with a large bankroll to fund all of its requirements, the facilities, and equipment needed to transform their idea into a star product that knocks it out of the park on the first try. In short, not every supplier is going to be a PepsiCo or a Kellogg’s right out of the gate, it takes time and help. 

What is Contract Manufacturing?

A lot of suppliers need help to get their product made, out the door, and onto retail shelves. They have a great product, but perhaps they don’t have the resources to invest in the needed manufacturing equipment to produce on a larger scale or expand their product offering. And it’s at this point that suppliers will need to turn to contract manufacturers for aid. 

So, what is contract manufacturing, you may ask? Simply put, it’s a supplier outsourcing their production to a manufacturer who has the capabilities to produce that product—for that supplier, and most likely a few other suppliers as well. The manufacturer will produce this product for a specific amount of time or volume—whatever the two parties have agreed upon. 

Pros and Cons

There are a lot of benefits to contract manufacturing, particularly for smaller suppliers, including cost savings for both sides: Suppliers don’t have to shell out money to keep manufacturing equipment up and running, and manufacturers often have multiple clients, which means they can offer the suppliers reduced costs on things like ingredients. 

But there are risks to look out for as well. Quality control might differ between supplier and manufacturer, and relationships need to be well maintained. Pricing and profit are also a risk—now that a second company (the contract manufacturer) is involved in the product, how does that affect the product’s price point, and how much does it decrease a supplier’s margin?

Contract Manufacturers on RangeMe

While these challenges can seem daunting, RangeMe is introducing a new Service Provider Category to help suppliers get to market even faster. Product specialties in the Contract Manufacturing Service Provider category will include cosmetics, food, beverages, dietary supplements, and CBD products. RangeMe Suppliers will be able to search for contract manufacturers under the Services tab and find the best partner that meets their needs. By working with one of RangeMe’s partner contract manufacturers, suppliers can decrease upfront costs, manufacturing effort, and time to market by scaling quickly in product development and supply.  

Partnering with a contract manufacturer is common in the CPG industry, but finding the right partner can take time. Tapping into RangeMe’s newest category of Service Providers can help suppliers navigate the complex process of bringing a product to life. 

Explore Contract Manufacturer Service Providers on RangeMe here. 

Need help with a part of your business other than contract manufacturing? Explore other RangeMe Services here.