Third Party Manufacturing: Is It Right For You?

So you need a product manufactured. While you may easily assume that the only option you have is manufacturing it yourself (“in house”) this isn’t actually the case. Third party manufacturing has been alive and well in the industry for quite some time, and it’s been embraced wholeheartedly by many small business owners in recent years. If you’re not familiar with this approach, however, you may have a few questions before committing to it.

What Does Third Party Manufacturing Involve?

Typically, there are two main approaches to third party manufacturing. The first one would be contract manufacturing. During this process, the initial contract is set in place between the client and the third party manufacturer. From the beginning to the end of the process, the manufacturer handles production. We secure materials and deliver the final product.

Toll manufacturing is similar, but has a few key differences. The main difference is that the client secures the raw materials for the manufacturer, maintaining a certain degree of control, as we’ll delve into further below. Although contract manufacturing and toll manufacturing are sometimes implemented in different ways, both fall under the third party manufacturing umbrella.

What are the benefits of third party manufacturing, and why is it so often relied upon by small business owners? Let’s explore the reasons why both approaches are so valuable. While you don’t have to choose third party manufacturing for yourself, ultimately it’s possible that this approach could be the best way for you to streamline production.

What Are The Benefits of Third Party Manufacturing?

1. Efficiency

Perhaps the biggest benefit of utilizing third party manufacturing rather than handling your manufacturing in house is efficiency. While you may find it more efficient in theory to manufacture products within your own company, there’s a lot that goes into this process. You must own manufacturing equipment, or otherwise rent it (which can sometimes be complex and expensive). Additionally, you must own or rent manufacturing facilities. Furthermore, you’ll need to put time into either training current employees to operate the equipment, or hiring employees that have already been trained. This can take months, and if you need the process finished quickly, keeping it in house may be less than ideal. A third party manufacturer already has all of the equipment, employees, and facilities required, and can get to work as soon as you’ve approved of the necessary processes.

2. Affordability

Inevitably, one of the main benefits of working with a third party manufacturer is the affordability factor. Again, theoretically you may believe that you’ll save money by keeping the manufacturing process in house. But the reality is that manufacturing is incredibly expensive if you don’t know what you’re doing. You’ll need to pay for facilities yourself, as well as equipment. You must either hire temporary employees, or, if the manufacturing process is necessary long term, permanent employees. Your budget will inevitably expand when you handle manufacturing yourself. Furthermore, you can have a degree of control over the cost of third party manufacturing if you choose toll manufacturing. When working with a toll manufacturer, you may select the raw materials for production yourself. Therefore, you’ll be able to select a more affordable material if you prefer.

3. Quality Control

There’s a level of quality control that comes with manufacturing in house—but you may not be able to fully implement it the way you’d like. For all that you can control the process when you’re manufacturing in house, if you don’t know how to manage it, there isn’t much use to it in the first place. All too often, business owners unintentionally produce faulty product runs. Not only can this lead to customer dissatisfaction and complaints if you don’t catch the issue early; it also results in you losing money on the materials you secured for production. When working with third party manufacturing companies, you’re confident that what you’re receiving is what you want and need. Furthermore, a good third party manufacturer like CTI will have you approve prototypes before delivering a pilot run. These trials ensure that you get exactly what you require.

4. Consultancy

Perhaps one of the biggest advantages of working with a third party manufacturing company is that you can consult with the manufacturer before moving forward with your products. This means that you can give your own input, while also receiving their input in turn. If you’re inexperienced with manufacturing directly, this can be incredibly useful. It’s important that you take this input and process it, though you don’t necessarily have to follow their advice. At CTI, we believe in working with our clients in a collaborative manner. If you have questions, we’re ready to answer them. Additionally, we genuinely want to know what you think would be best. Ideally, we can come to an understanding together, and this will ultimately result in the best possible product.

There are a myriad of benefits behind working with a third party manufacturer, beyond what we’ve listed here. However, it’s important that you consult with a manufacturer specifically before making a final decision. Why not connect with CTI? We’ll discuss our process, as well as what we can do for you. Call us at 419-924-5566 or reach out online. The more you know about third party manufacturers directly, the more you’ll understand exactly how the process may work for you. Remember: third party manufacturers don’t take control away from you. We’re here to streamline your process and make it much simpler.