For contract manufacturers, winning new business can be a long and complex process. Clients need assurances that their supplier will minimise commercial risks, satisfy technical, quality and cost criteria and work to agreed timescales. Caroline Bramwell, Managing Director of The Olden Group, considers the decisive factors
No business takes the decision to outsource its manufacturing lightly. However successful a company’s advertising, marketing and sales campaigns are, its reputation ultimately rests on the quality of its delivered product. For this reason, the selection, evaluation and managing of contract manufacturers (CMs) has evolved into a sophisticated process involving a multitude of considerations.
Once the preserve of the purchasing department, a typical CM appointment team these days will include design engineers, technical and quality assurance managers, management accountants and possibly even independent outsourcing consultants. All businesses vary and those in heavily regulated industries such as food and pharmaceutical production will have specific compliance-led criteria. However, in most cases, a CM selection process will begin with the drawing up of a list of possible suppliers. This is where your effectiveness at building awareness of your brand will pay off.
Clients will initially value word-of-mouth recommendations, your reputation for quality in their sector and your perceived capability to cope with the scale of their manufacturing needs. This stage is likely to be followed by informal contact to gauge your suitability for the contract and to assess how the client/CM relationship will work over an extended period. This is your opportunity to find out what the client’s specific priorities and concerns are. For example, if they are moving from an in-house manufacturing facility to an outsourced solution for the first time, expect some degree of nervousness. If they are seeking to replace an existing CM, try to identify exactly where you can improve on their current arrangements.
Paying close attention to your clients’ concerns, in terms of both the technical expertise and the quality of the relationship they’re looking for, will increase your chances of making the shortlist and being invited to submit a formal proposal. When writing your formal proposal, match your capabilities directly to the brief in the same order of priority as set out by the client. In most cases, CMs are selected on the basis of a combination of these capabilities: Buying power and knowledge of the component supply sector – many clients want to know that, by outsourcing their manufacturing, they are getting a better deal on components than they may be able to achieve on their own.
Make your industry contacts and economies of scale count by proving that you will save them money on components. Similarly, reassure the client that your specialist knowledge reduces the risk of counterfeit components finding their way into the finished product. Design – even if the client has produced an exacting design specification, you will add value to your proposal by showing your deep understanding of design principles. This will also convince the client that you can play a role in product improvement over the life of the contract. Assembly – clients are looking for excellence and consistency in product assembly.
Along with the quality of the components, this is vital to ensuring a high calibre end product, reducing malfunction rates and the possibility of recalls. Testing – almost every product made these days is governed by at least one industry and/or safety standard. At the same time, clients want to know that your assembly processes guarantee repeatability. Demonstrate your commitment to – and investment in – product and process testing in your proposal.
Timing – getting a new product to market on time is crucial. The success of your client’s advertising, press campaigns and exhibitions planned to coincide with a new launch depends entirely on the availability of the product. In hotly contested marketplaces, coming second to a competitor in the race to get an anticipated product into the stores can ruin a campaign before it’s even had a chance to take off. Understand the client’s concerns about timing and demonstrate in your proposal how you will meet deadlines.
Peace of mind – although the client will appoint people to work closely with you throughout the contract, they will want to know that, having outsourced their manufacturing, they can concentrate on their core competencies. Show that you understand the client’s bigger picture and that, as well as producing an excellent product at a realistic price, you are allowing them to concentrate on building their business through design, product development and branding etc.
Cost savings – although the outsourcing versus in-house manufacturing facility argument may well have been won by the time you reach the proposal stage, you’ll still have competing CMs to contend with.
Clients will naturally want to minimise their costs, though this objective will be weighed carefully against the risk of damage to their brand if the quality is not up to scratch.
Assess and validate – your understanding of the client’s priorities before you start writing your proposal. This will help you create an offer that directly addresses their needs in terms of quality, cost and timeliness. Then, offering support at every stage of production, from design through to packaging and shipping, will help consolidate your position as a trusted long term manufacturing partner.
The Olden Group
