Guide to Outsourcing Food Manufacturing

Objectives When Outsourcing Food Manufacturing

There are a lot of reasons for outsourcing food manufacturing and objectives you might want to achieve.

Reduce Costs and Complexities

Creating new manufacturing capabilities is costly and adds complexity to your business operations. This applies whether you have an existing manufacturing operation but now need new capabilities or you have no current manufacturing abilities at all. Outsourcing to a food manufacturing specialist will give you near-instant access to the production capabilities you need with considerably lower costs and reduced complexities.

As well as cost and complexity savings, outsourcing food manufacturing can also accelerate time to market for your products.

Focus on Core Competencies

Manufacturing is only one part of creating a food brand and/or launching new food products. Product development, marketing, and building relationships with customers are also essential.

While manufacturing is one part, it is complex and highly specialised. Therefore, it makes sense to outsource manufacturing so you can focus your energies and resources on other parts of your business, especially those parts that are core competencies that will drive success.

Augment Existing Capabilities

Established companies outsource food manufacturing to augment existing capabilities in a range of situations:

• Rather than upgrading, modernising, or replacing existing equipment and/or production lines that are inefficient, unreliable, or at their end of life, you can outsource the process.
• Companies that have to scale up production capabilities to meet growing demand can outsource to a contract manufacturing partner rather than adding capacity at an in-house facility.
• Companies that need specialist expertise can also choose a contract manufacturing partner rather than trying to develop that expertise in-house.
• Companies also partner with contract manufacturers as part of contingency and business continuity planning.
• The third-party contract manufacturer will develop capabilities that can be utilised whenever required.

Considerations When Outsourcing Food Manufacturing

The type of service you can expect to receive from a contract manufacturing partner will vary depending on your requirements but can include product development, recipe optimisation, and cost engineering. Contract manufacturing also typically includes ingredient sourcing, procurement, and supply chain management. There is also the manufacturing of your product as well as quality control, packaging, and labelling.

Whatever your requirements, what should you look for and how should you assess a contract manufacturing partner? The following considerations are a good starting point.

Experience

Experience is invaluable in food manufacturing, especially experience related to the types of products you want to produce. It is beneficial to look at the contract manufacturer’s broad range of experience including product development, cost optimisation, supply chain management, and continuous improvement experience.

Quality

The quality of your product is essential to establishing your brand and building strong and loyal relationships with your customers. Therefore, it is important to make sure your contract manufacturing partner has commitments to quality that align with yours. It is also beneficial to look for a track record of quality.

Food Safety

At Finedale Foods, we believe food safety is non-negotiable and should never be diluted. As a result, our advice is to choose a contract manufacturing partner that operates to the highest food safety standards. It is also beneficial to have food safety standards independently verified. For example, Finedale Foods is BRCGS AA accredited, the highest BCRGS food safety accreditation available.

Capabilities

Does the contract manufacturer have the capabilities required to produce your product? If they don’t have specific capabilities in certain areas, can those capabilities be added?

Capacity

Capacity is also an important issue to consider when outsourcing food manufacturing with a number of factors at play.

It starts with capacity during the development process as your project moves through various stages to get your product into full production. Does your contract manufacturing partner have the capacity to allocate sufficient time to this process?

The contract manufacturer also needs sufficient capacity to manufacture enough products to meet your launch requirements and then maintain sufficient ongoing supplies.

You should also consider what might happen if you see strong growth in demand for your product. Will your contract manufacturing partner be able to scale up their capabilities to meet the growing demand? How will a scale-up in production to meet growing demand be achieved?

Confidentiality

The protection of your intellectual property and other commercially sensitive information is essential when partnering with a contract manufacturer.

Supply Chain

Does your contract manufacturing partner have a robust supply chain? What contingency plans do they have when things go wrong? How does the manufacturer manage its supply chain?

In addition to the above questions, it is also beneficial to factor in the manufacturer’s approach to sustainability and business ethics in relation to supply chain management. For example, at Finedale Foods, we only work with suppliers that protect the environment, ensure animal health, and operate ethically.

Sustainability

Sustainability was mentioned in the previous point, but sustainability doesn’t stop with suppliers. It is also important to ensure your contracting manufacturing partner’s commitment to sustainability aligns with yours.

Logistics

What level of logistics support will you receive from your contract manufacturing partner?

Transparency

Open and honest communication is essential when partnering with a contract manufacturing organisation, as is full transparency and operational oversight.

Continuous Improvement

Food manufacturing is not a static undertaking as markets change, technologies change, regulations change, and more. The needs of your business can also change, plus it is better to work with a partner who is always trying to enhance their service. As a result, continuous improvement is an important characteristic to identify in your food contract manufacturing provider.

Financial Stability

You don’t want to get deep into a relationship with a food contract manufacturing partner only for problems to develop because of a lack of financial stability.