With the global growth for international foods across leading retailers as they look to further establish the category across ambient and frozen. These export driven markets are seeing the level of competition significantly increase. Developing an effective export strategy is a complex process intrinsically linked to a number of critical considerations. In this latest blog we focus on one element of that plan with the key questions you should consider when developing a contract manufacturing strategy
Contract manufacturing or OEM is an increasingly popular route to market for brands or retailers. The right partner selection can bring access to expertise, accredited food processing capability, technical expertise, regulatory guidance, procurement specialists and proven supply chain capability.
Gaining that much sought after product listing in a leading retailer is a significant achievement, but it’s often where the hard work really starts. Not only are your competition trying to displace you as soon as you are listed but the buyers focus on availability and service levels will normally be a key factor in the launch’s success.
6 Key Questions
Strategic partnership or transactional relationship. Either can be effective depending upon your needs, one should lead to the unlocking of mutual benefits through volume, procurement, ways of working or longer-term investment, with both parties focused on success and market share gain. The second, frequently focused on cost control for a service, less agile but delivering the basics consistently with little added value
Location. The food manufacturing landscape has evolved from tradition and access to local capability, expertise, raw material and proximity to the end customer. Understanding this evolution and the manufacturing landscape helps identify the right partner and capability to support your business. Where do you need to be and why?
IP ownership and Specification management. Replicating your product through a co-manufacturing partnership requires the ability to manufacture to a standard that reflects your brand, from key named ingredients through to manufacturing technologies or processes. Considering how you manage IP ownership is critical and the level of detail available through product specifications
Volume requirements. With the focus on end or retail shelf edge availability understanding a potential supplier’s capacity from raw material storage through to finished goods is essential. The ability to store ingredients, packaging, work in progress through to finished foods will all influence success. Top line capacity is very different to available capacity, so gain clarity. Additionally consider the ability for supply to grow as your business grows, what could a 10% uplift over 3 years look like as an example?
Quality. Defining quality standards, frequency of monitoring, handling of customer complaints, major food safety issue management and access for 3rd party audits should be concisely documented to protect brand standards, consumer experience and regulatory compliance
Ordering and Production cycles. Initial volumes are likely to vary as you feel the supply chain, execute introductory or promotional activity drive awareness and the speed at which the products resonate with consumers will influence sell through rates and ultimately the need for future production runs. Flexibility in the ordering process is important to support the business through the early phases and meet trade buyers’ demand.
As a specialist food and drink consultancy we regularly advise clients on contract manufacturing strategies from capability searches meetings through to first production run management. Need help let’s talk today hello@profcg.com. With our team of industry-leading experts and extensive range of services, we’ll help you take your business to the next level.
For more information or to discuss how Prof. Consulting Group can support your business, please visit https://www.profcg.com/contact/.
