Manufacturing private-label products without one's own plant or personnel? Yes! It is possible thanks to contract manufacturing. What does such a contract involve? What can you expect from a contract manufacturer? Is such a project worth participating in? Before we answer these questions, we should first explain what contract manufacturing is.
Contract manufacturing is a way of cooperation between an entrepreneur or entity (such as a company) and a production service provider called contract manufacturer. The manufacturer makes the product specified in the contract and then sells it to the entrepreneur’s customers. The order may cover any products, no matter if they are cleaning agents or cosmetics. Contract manufacturing offers great opportunities to enter the market with a wide range of products in a short time, without having to invest or rent a factory or other necessary facilities.
During the contract, the manufacturer is responsible for hiring properly qualified personnel, providing necessary industrial machinery and equipment, and gathering funds required to carry out the production process. During production, the entrepreneur does not lease the manufacturer’s plant. It should be noted that the entrepreneur has the title to all intangible goods such as patents, trademark or know-how. The contract manufacturer is entitled to tangible goods: stocks of raw material, labour, and finished products.
Contract manufacturing of cosmetics is run on similar terms as for other products. As part of contractual collaboration, the entrepreneur should monitor the time, quantity and quality of the products commissioned for production. He may request the manufacturer to conduct quality tests, if the latter has the required personnel and laboratory equipment. Sales, advertising and marketing also remain the entrepreneur’s responsibility. The contract manufacturer does not take part in these activities. In fact, cleaning agents manufacturer only guarantees the provision of services which he undertook to perform, receives the remuneration and is not exposed to any direct financial risk.
Contract manufacturing of private-label household toiletries allows you to select an appropriate manufacturer. But how to do it and what rules to follow? The best way is to evaluate the company for the quality and range of its services. The products offered are not important, as during contract cooperation the manufacturer will only render services – all raw materials and work instructions will be provided by the entrepreneur. You should also pay attention to the potential manufacturer’s production capacity. You should think about the planned production volume and assess the proposals considering the costs of storage. A good idea is to choose a manufacturer who owns a certified laboratory. Such a manufacturer will quickly carry out the tests, and the product will soon get to its recipients.
Some household chemicals manufacturers offer extended services. The entrepreneur may but does not have to use them. However, we should be aware of what the manufacturer can help us with. Extra services are mostly used by the entrepreneurs who develop private-label household chemicals for the first time. With the manufacturer’s knowledge and experience, the entrepreneur can save trouble and money.
Support can be found at virtually any stage, from the selection and purchase of raw materials to the manufacturing of packages for household chemicals. Contract manufacturers can offer such services as:
A contract chemical manufacturer who cooperates with the entrepreneur in a contract manufacturing scheme may become a long-term business partner. This results from a wide range of benefits offered by such a collaboration.
Firstly, both parties are linked by a contract regulating all legal matters concerning the production. It provides security for both partners in case of non-compliance with contractual terms. Secondly, the contract manufacturer has a vast production capacity, which the entrepreneur does not possess. Production of a large amount of cleaning agents in a short time makes it possible to quickly market the entire range and reduce the costs. The entrepreneur does not have to invest funds in the contract manufacturer’s business; moreover, he may draw on the manufacturer’s knowledge, experience and know-how concerning the production process. Cleaning agents manufacturers eagerly cooperate with entities that wish to introduce their own private label, as they find it profitable. Additionally, the contracts are concluded for a long period, which provides comfort for both parties.
Entering the market with a new brand is not an easy thing to do, no matter if you intend to sell cosmetics or cleaning agents. A contract manufacturer is a business partner who can help you develop a complete product and place it on the market in a short time. Contract manufacturing guarantees timely and reliable completion of the order in cooperation with experts.