What is a Contract Manufacturer?

A contract manufacturer is a firm that expedites the manufacturing process for business owners. Put simply, contract manufacturers (CMs) use their systems to help businesses develop products to sell. If you’re looking to bring a new product to the market, contract manufacturers are a great option for you. A wide range of businesses both big and small practice outsourcing of their manufacturing operations. Developing a product from start to finish requires significant resources, especially in the beginning stages. Outsourcing to a CM allows you to cut down on what it costs to bring your product to the market.

Finding the right contract manufacturer is one of the biggest steps in starting a successful skin care business. CMs are a step up from private label in a way, allowing business owners more control over the details of their products. Varying costs, quality, and operations make it difficult to determine the best CM for the best return on your investment. Don’t let this deter you, however. Understanding what to look for and what to avoid when shopping for a CM is the key to making the right choice for your business. In this article, we’ll go over the top 5 myths that hinder business owners when choosing a contract manufacturer.

1. Lowest Price Is Best

As a new business owner, your first instinct may be to source the cheapest quote and go from there. While this may appease your wallet in the beginning, your supply chain will ultimately pay the price. When it comes to contract manufacturers, much like with private label skincare, you get what you pay for.

The lowest possible price doesn’t always represent the best value for your business. Lower quotes usually mean dealing with hidden costs and expenses that weren’t included in your original agreement. Many business owners wind up having to shell out additional money for charges that could (and should) have been included in a realistic quote. This is why choosing the right contract manufacturer and not necessarily the cheapest, is so important.

2. You Give Up Control

Many business owners fear they lose the ability to manage operations when they outsource. Anyone who has dealt with an adequate contract manufacturer for their skincare brand will tell you the exact opposite.

A good CM doesn’t take away your ability (or need) to manage your supply chain. In fact, a good CM makes it easier to manage your business, giving you the opportunity to spend more time on the rest of your business operations. Losing control to a CM means you either chose the wrong manufacturer, or you’re unsure of how to manage outsourced operations.

3. Development Should Be In-house

Many business owners hold off on involving a CM until they’ve completely conceptualized their product. While this may seem wise, this practice can actually end up hurting your business. Not involving potential contract manufacturers in the development of your product can leave significant gaps between the product design and the actual abilities of the CM. It doesn’t really make sense to develop a product that can’t actually be brought to market. You can save you and your team a lot of trouble by considering your CMs early on.

4. Outsourcing Is Less Reliable

Many frame outsourcing as a second-best option that limits the success of a business or product. In reality, outsourcing is a necessary business component that gives owners opportunities to bring products to market that they wouldn’t have otherwise.

Outsourcing is like any other business operation and should be treated with the same caution and attention to detail as the rest of your operations. Arguably, CMs who are committed to nothing other than manufacturing may be more equipped for the process than in-house manufacturing. So long as there is open communication, there’s no reason outsourcing is less reliable than in-house production.

5. My Operation Will Be Less Flexible

Working with a CM doesn’t have to mean the loss of flexibility. In fact, for many business owners, choosing to work with a contract manufacturer means increasing the flexibility of their operation. For newer businesses that need to be flexible in order to survive the market, CMs make it easier to make changes to the scale of your business. Because CMs already have systems in place for manufacturing, they can handle changes (limiting production, shipping to new areas, etc.) with little to no offset to your business.

As with any business practice, there are risks when it comes to working with contract manufacturers. These risks become much more manageable, however, when you understand the mistakes to avoid when choosing a CM. Outsourcing opens up a world of possibilities for your skincare brand and makes it easier to get your new product out there.

1. My Operation Will Be Less Flexible

Working with a CM doesn’t have to mean loss of flexibility. In fact, for many business owners, choosing to work with a contract manufacturer means increasing the flexibility of their operation. For newer businesses that need to be flexible in order to survive the market, CMs make it easier to make changes to the scale of your business. Because CMs already have systems in place for manufacturing, they can handle changes (limiting production, shipping to new areas, etc.) with little to no offset to your business.

As with any business practice, there are risks when it comes to working with contract manufacturers. These risks become much more manageable however, when you understand the mistakes to avoid when choosing a CM. Outsourcing opens up a world of possibilities for your skincare brand, and makes it easier to get your new product out there.