We deal in third-party manufacturing, and hence thought it’d be best to share a few insights about the same. Let’s start with the basics.
What is Third-Party Manufacturing?
Third-party manufacturing is outsourcing the task of manufacturing your products with your brand names to other manufacturing units. The third-party manufacturers deliver your products as per the defined quantity & timeline.
Hence, if you tie up with a good third-party manufacturer, it reduces the investment costs, time, and workload of your organization.
The concept of third-party manufacturing is becoming quite prevalent in the pharma industry, even for those industries that have their own manufacturing plants.
Why choose a third-party manufacturer?
Why would we go for something if it doesn’t come with its set of benefits? Similarly, going for third-party manufacturing is becoming a choice for pharma companies due to its own set of advantages.
- It carries a significant advantage for small companies – they can start their business without worrying much about setting up the infra or investment costs.
- It provides the opportunity to save on a lot of resources, including land, workforce, etc.
- It increases productivity, as you can have many products manufactured under your brand name.
- It ultimately saves you a lot of money.
How to select the proper third-party manufacturer?
- Make a list of products
As a pharma company, it is crucial to know your niche, the type of products you want to be an industry player in, and the type of issues you want to counter with those products. Once you have a list of those products, you must now list the products you would like to get manufactured externally through a third party with your own brand name.
- Make a list of your prospects
Shortlist a list of relevant third-party manufacturers, and start making a list along with their capabilities. You must have a checklist of what you’d want from your manufacturing partner, and each prospect should be checked against that checklist. It should come with a complete package of product development, production, testing, processing, etc. The company should be a professional and reputed one. A wrong choice can impact your business.
- Check for the efficiency of these third-party manufacturers
It is significant to check the machinery, technology, equipment, and infra of the prospects to analyze their efficacy. They should be able to deliver the required products in market-ready condition.
- Reach out to the finalized list
You must, in the end, have a list of candidates (please note a list, not just one or two) to whom you must reach out (through email or call) and ask for their quotations against your requirements. The requirements must be clearly specified from your end, and every detail must be sought from their end.
- Finalizing the third-party manufacturer after thorough research
Once you are convinced with your selection, you must place the finalized purchase order with them. You must also finalize your ‘choice design’ with them. This would include preferred artwork, selected colors, brand name & style, packing & manufacturing details, etc.
The transaction of goods must ensure complete documentation from both ends.
Misconceptions that you should avoid
There are various myths about the third-party manufacturers and their selection that might cloud your judgment. Hence, it would be good to avoid such misjudgments at all costs.
- Company quoting the lowest is the best
It is the biggest misconception when it comes to partnering with someone. It is not necessary that the ones that quote the lowest are the best. There are two aspects that can raise doubts here.
- Are there any hidden charges? There are many times; hence it is required to be absolutely clear on the terms and conditions before entering into the partnership.
- Is the company competent and genuine? Quoting some unbelievable low prices must raise such questions. Hence, it is said rightly to test the waters early for a long-term partnership.
- Partnering with Tier-1 manufacturers is the best
For best & quality results, a manufacturer must suit your requirements, irrespective of being ‘tier-1’ or not. ‘Tier-1’ is merely a tag used for big-size companies and should never be your primary criteria of selection.
- Not associating with a competitor’s third-party manufacturer
Your manufacturing process can be unique, but it wouldn’t be disrupted merely by partnering with the same third-party manufacturer as your competitor. Hence, don’t just miss a good company for only this particular reason.
- It’s just about finding a supplier
No, finding a third-party manufacturer is not just about finding a supplier. Rather, someone that is much more and acts as a value addition for your business. It is about finding a company that is competent in sharing your workload, maintaining or rather enhancing the quality, and also suggesting improvements.
It is a must to do your homework before shortlisting and finally selecting your third-party manufacturer. It may be third-party, but it very much becomes a crucial part of your business and hence must be selected wisely.
Avani Raj Arora