Addressing the Manufacturing Dilemma

As your brand gathers momentum, many critical decisions need to be made that affect your brand’s future. The single most important decision is the future of manufacturing to support the expansive demand of your products. Where do you go when you have outgrown your original manufacturing method? Should you invest in the manufacturing equipment or find a contract manufacturer (co-packer) to help you scale your business?

To answer this complicated question, you need to have a concrete understanding of the current market situation, your brand penetration, and the growth plan for the next 5-7 years.

• What is the forecast for your brand’s market in the next five years?

• What is the economic outlook of current and future geographical markets?

• What is the current year over year growth of your current product offering?

• Do you have new retail distribution that will significantly impact the demand?

• What is the status of and access to financial resources?

• How many SKU’s do you anticipate developing by the end of year 5 and at the end of year 7?

Once you have done your research and have a clear plan on your brand’s future, the next step is to review the pros and cons in-house vs contract manufacturing.

Let’s review In-House Manufacturing. No one knows the brand better than its founder. The founder is intimately tied to the ethos of the brand – performance standards, key features, and value/benefit positioning. By retaining in-house manufacturing, you maintain:

• Dedicated R&D teams

• Quality Expectations

• Control Supply Chain / Timelines

• Speed to Market (new product launches)

The downside of in-house manufacturing:

• Significant upfront capital expenditures

• Unable to scale up due to lacking formality in the go to market strategy (development process)

• Difficulty absorbing facility overhead costs

• Distraction from brand and product development focus

• Lack of formal processes being established:

  • Safety and regulatory testing

  • Formal SOP process documentation development

  • Some outsourcing still required to support technology

By partnering with a contract manufacturer, significant advantages exist which can greatly improve your ability to grow and evolve your brand:

• Focus your team on product and brand development

• Research and Development expertise

• Lower startup costs

• Increased exposure of raw material and technology innovation

• Formalized manufacturing SOPs already in place

• Ability to quickly scale up production

Some challenges with outsourcing your manufacturing:

• Perceived loss of control of IP, Quality and Speed to Market

• Shared product development and R&D time with other clients

• Communication of brand / product performance expectations

• Quality Expectations

These challenges can be overcome with a solid vetting process when selecting a contract manufacturer along with a strong technical person (either on your team or outsourced) who can protect your interests.  

Whatever path your brand selects, it is crucial to allow ample time to assess which makes the most sense to lead to significant growth of your brand.