The last two years (2020-2021) offered their fair share of challenges in the wide world of contract manufacturing. From the perspective of a contract manufacturer focusing on dietary supplements and skin care products, we are consistently asked four main questions:

• What is your production capacity?
• What is your delivery time/turnaround time?
• How do you assure quality in the process and to the product?
• What is the cost?

Answers to these four major questions from brands and businesses can determine an emerging partnership or a quick “click” on the other end of the phone.

As if the process did not have enough moving parts already, when supply chains become as tense as they have been, it can lead to issues with customers that were not originally foreseen. How these challenges are addressed as a team will mean everything when completing a manufacturing project.

We are entering a time period in the manufacturing industry when working closely with raw material providers/suppliers/brokers need to be tighter than some of your closest customer partnerships. This can make or break orders. An unreliable supplier can single-handedly make your process run smooth or damage it to the point of no return.

This article explains, from the point-of-view of the manufacturer, how we manage supply chains and work with customers under challenging circumstances.

The past two years, quite frankly, have been crazy. We saw costs of raw materials like creatine and whey protein spike to near an all-time high (due to shortages or for other reasons). We saw shipping container ships get held up for weeks at a time prolonging delivery times that were marked “undetermined.”

We realized that in order for us to seamlessly fulfill our goals with our customers we needed to create stronger relationships with our material providers. We needed to know their operations backward and forward, stay in close daily communication, and ensure they provided tracking details and arrival timelines.

Without this, it wouldn’t matter what our sales team told a customer, as materials would arrive when they arrive. And that’s not an answer we can ever provide a customer.

Once we identified this as a weak point, we focused on refining our purchasing team, R&D, and relationships with suppliers. We learned how to be a better manufacturer from this. We learned areas of improvement. We learned the type of people that are the best fit for our operation. Most importantly, we identified our weakest point and corrected it.

Supplier Trust = Customer Trust
You must have trust with vendors and a synergistic relationship. This involves setting clear order expectations in the very beginning based on what is realistically possible.

“Always go with a trusted raw material supplier that provides their own shipping. Build that relationship and trust each other for continued business,” said Betka Kapusta, COO and co-founder of BL Bio Lab.

It starts with shipping and it ends with shipping. Shipping costs have jumped dramatically over the past few years. These are fees that manufacturers always need to keep in mind when purchasing materials domestically or internationally, as that can cut into margins. Working with a trusted raw material supplier that provides the proper paperwork on the materials (Specification Sheet, COA, etc.), shipping, and delivery is vital for success as a manufacturer.

Location is also a key factor in acquiring materials for orders. It has always been a big factor in the process. With the rise of shipping costs, vendors that are closer to a manufacturer’s location to order supplies could not be more important when watching margins. Before, it did not matter as much if it was domestic in the U.S., but now it is starting to be a bigger factor as shipping fees eat more and more into margins.

In order for manufacturers to manage their supply chains effectively, it is necessary that steps are taken early on to identify potential problems before they arise. This includes monitoring different aspects of the production process such as quality control and testing various materials being used during production so there are no chances materials ordered and acquired for production runs are contaminated or compromised in any way.

While companies may spend a considerable amount of money testing materials early on there is often a much larger price to pay if defective products make it past the final stages of production. Updating orders halfway or more into production could hurt your partnership with your customer.

Testing is done by requesting samples of materials from suppliers to run R&D pilot batch/sample runs to validate formulations.

Customer Loyalty is Everything
Mitigating these ongoing issues must be done with full transparency at all times. A longtime business partnership is cultivated on providing truthful data about turnaround times, formulation updates, and expected paperwork—all the while providing weekly updates on the progress of the order moving forward.

Customer loyalty is also a team effort. The customer to the manufacturer must be just as invested in the completion of the project as the manufacturer. This may seem like an obvious statement, but in our experience, it would surprise you how many customers create delays on purpose because of playing their release too fast.

Businesses may tell retailers or investors that production will be completed at one point in time and need to hit a hard deadline. As a manufacturer, it is very important to state that we will do everything we can to hit those dates as long as you are fast with providing answers back to us when we ask questions to approve items such as labels, packaging, etc. The best relationships are ones where both parties are fully invested in the completion of the project for a specific turnaround time.

Customer loyalty is all predicated on your ability to communicate effectively with your business partner/customer. Take action, be honest, and deliver answers. Listening to what the customer expects upfront is a blueprint to exceed expectations.

Consumer loyalty can be obtained through transparency in action. Following a contract that states honest turnaround times and expectations is key. Everyone always wants it faster. But we realized that our best customers understand what can and cannot be done, and that is why our relationships with them are prospering. Unreasonable individuals just can’t be reasoned with.

Sometimes even the largest potential deal may not be worth the stress if you know your customer is difficult and has zero loyalty to you long-term. We have found we can do everything to make a customer happy, but for the next order they may leave for another manufacturer that provides the product for $0.10 less. Identify those customers and remove them from your CRM; they are not worth the time. Customers tend to forget how many moving parts are at play when placing an order with a contract manufacturer. It is the job of the sales/customer service team at the manufacturing operation to politely remind them.

Find partners that are matched for your operation and its needs. Any manufacturer will tell you this industry thrives on reorders from current customers. Finding the customers that will do that with you is key to expansion and growth. Once you have a customer that finds success make sure you devote a lot of attention to cultivating the orders they place with your operation.

Marketing Strategy & Research
It is beneficial for manufacturers to understand their customer base as well as what makes companies choose one product or service over another. Manufacturers that have strategic marketing in place to finetune their approach and go after customers/projects that are a good fit is also a huge factor.

Manufacturers that take on projects that involve capabilities they don’t have in-house can run into issues. On the other hand, manufacturers that know their specialty and focus on marketing those services will find the most success.

For example, if a manufacturer can pinpoint why consumers are attracted to certain brands over others then they can produce similar quality goods while also increasing profits and supporting that market’s growth. Find what works and double/triple the effort on it.

Conclusion
The supply chain paradigm has changed drastically over the past few decades with the advent of new technologies that have allowed for more effective communications among partners within a company’s network. At one point, there was little information sharing between suppliers and manufacturers which led to higher costs and dysfunction associated with transporting goods.

This issue has been resolved by implementing up-to-date technology since companies are now privy to more accurate information regarding their supplier’s needs, which allows them to better manage their inventory and the flow of goods within the supply chain. Manufacturers can also implement internal systems to check and track inventory levels and have a direct feed with suppliers. This can help manage process flow.

Increased transparency among parties involved is tied directly to improved customer satisfaction. This is related to how manufacturers are able to connect with customers on a more personal level and create long-lasting business partnerships. This allows customers to provide feedback on what they desire in various products as well as recommend features that may have been overlooked.

Key takeaways from this article include:

• Strong ties with qualified suppliers that ship their own materials is key;
• Set clear expectations with your customers about delivery times;
• Manufacturing success is about reorders and long-term partnerships with customers;
• Be transparent in your actions internally and externally.

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BL Bio Lab is a contract manufacturer of dietary supplements and skin care products in Clearwater, FL. The company focuses on manufacturing custom and private label capsules, tablets, powders, liquids, serums, creams, and more. For more information and to get information on custom formulations and pricing, visit www.blbiolab.com.