Selection of cosmetics contract manufacturing partner is a big deal. Businesses are spending more time to outsource manufacturing facilities. In this post, we will discuss about top misconceptions that people have while selecting contract manufacturer for their products.
- Right contract manufacturer will make things perfect
Contract manufacturing is a tough, competitive, low-margin business and it is one that needs to be managed in active manner. OEMs that get the best output and that express the extreme level of satisfaction with their contract manufacturers are ones that form their own operations organizations to manage outsourced manufacturing.
- Lowest quote price is always the best
Many times contract manufacturers provide the quote to the organization with invisible costs. So if you meet any contract manufacturer claiming that his quote is the lowest, check for the various fees and charges that he usually doesn’t disclose.
- It is impressive to work with Tier 1 manufacturing partner
Companies have segregated contract manufacturers in one to four tiers generally. This helps explain differences in valuation multiples throughout the industry. Tier 1 depicts the “great big” that is used by big contract manufacturers when they have a bulk business order to place. Every time it is recommended to find the right size fit to understand the fit across other dimensions including geography, technology, end market experience, business model, etc.
- Never select the contract manufacturer who is already building for your competitor
You should select such contract manufacturer for your product who is already engaged in production of similar products. This will be an advantage because you don’t need to provide them special guidelines and just need to share the ingredients list you want to use for your cosmetics range.
You will get best results because they have experience in manufacturing alike products.
- Contract manufacturer that is willing to invest in your business will work best
There is hardly any advantage to get a contract manufacturer who loses money on your account.
- R and D should be able to handle production
Whether you are manufacturing in house or outsourcing, handling the production and the upstream supply chain is a profession and one that needs skilled professionals.
There are lots of startups that try to tuck operations of manufacturing under product development, but only fewer get successful with their strategy.
So, you are ready to take your decision for cosmetics contract manufacturing now. Make sure you will take these misconceptions seriously and make a wise decision.