5 Important Questions to Ask BEFORE Choosing a Contract Manufacturer

Dear Valerie: I’m starting a new skincare line and am looking for a contract manufacturer. I’m new to this industry, so I’m not sure what to look for. Any tips? 

—SKIN IN THE GAME

Dear Skin:

This topic excites me because I worked closely with our manufacturer in my previous life and was responsible for manufacturing for the last couple of years. I get to work with even more facilities today and leverage the same knowledge. 

I completely understand how finding a contract manufacturer can be a daunting task, especially if not familiar with “this side” of the industry. There are many manufacturers from which to choose. Finding one that can be a true partner is the challenge. With a little homework, it’s possible to find the right facility for your needs. Here are five questions to ask before commencing a manufacturing relationship with any facility.

1. What types of products is your lab best at formulating?

Most manufacturers will tell you their lab can formulate anything, which very well may be the case. But just because someone can formulate something, doesn’t mean it’s going to be high performing. I believe in mastery, and a jack-of-all trades is master of none. Skin expertise is very different from hair expertise. I’ll use myself as an example. I can formulate top-performing hair conditioners, but my moisturizers, which are also emulsions, are nothing to write home about. How many chemists are on their R&D team, and what is their formulating background? You can’t ask a chemist to formulate hair color if they have no hair color experience! I guess you technically could, I wouldn’t!

One way to find out this information is to ask the manufacturer for a percentage breakdown of their business; what percentage of their work is dedicated to hair, skin or color cosmetics? Can they further divest those categories into cleansers, moisturizers, scrubs, etc.? If they’re heavy in hair, and skin is only a fraction of their business, I would have further questions along the operational aspects to see if your skincare company would be a good fit. 

Don’t ask who else they manufacture for. It’s tacky of you. If they do advertise their customer base that’s tacky of them. Most companies sign NDAs with brands, and if a manufacturer is willing to talk about one customer, they’ll surely talk about you! Instead, consider asking which markets their customers sell into—they can disclose things such as retailers or even other non-identifiable metrics about their customers.

2. What product types are you best at producing?

Much like you may be told their lab can formulate anything, some manufacturers will tell you they can manufacture anything. Much like the lab scenario, this could also be true, but the manufacturer may not be best suited to scale up a particular project.

A great example is hot pours, products which are poured hot after the ingredients are mixed. Not all facilities have the equipment to efficiently keep a batch of bulk heated appropriately while filling it. Furthermore, they may not have the appropriate equipment to consistently cool these products after the bulk is filled into the components. A common scene is baker’s racks full of cooling hot pours. In theory, this works, but very few facilities are temperature controlled. If the product is cooled in a warm room in the summer, that’s quite different than how the product cools in winter. (If you’re curious why this is an issue, please read my Dear Valerie column in the May 2022 issue.) I’m not saying it can’t be done, but it’s difficult to produce a product with consistent and reproducible quality, without the right tools. A manufacturer with the right tools, who has experience doing these products leads to the best outcome for the consumer.

Another reason this question is important is because personal care products come in all sizes. That leads to my next question…

3. What are your typical volume requirements?

I hate when a manufacturer dictates a minimum order quantity by unit, without any regard to the product type. Five thousand pieces of a 16 oz. shampoo has different demands than the same number of pieces of a 1 oz. serum. Think of the difference in tank sizes, and those products are often not likely even made in the same tank!

I understand why a piece requirement is often stated, as there are set up costs associated with the filling process. These fees are amortized across the number of units filled. However, I strongly feel it’s not a closed conversation—though it’s often treated as one. A manufacturer may be so tied to a piece magnitude, they don’t realize that reducing the piece requirement may be more efficient based on the number of batches they must produce in their tanks. But I digress….

Reflecting on my previous point about a manufacturer’s product portfolio, if they primarily produce hair products, they are likely producing larger units because hair care comes in big bottles. Skincare packaging is usually much smaller, so if a facility has 80% of their business in hair, I would next explore how efficient they are in producing smaller unit runs. 

This also helps you decide if the manufacturer is a right fit for your company. I always ask my clients what products they want to produce and what their budget is for the production run. If you cannot afford to produce 5,000 pieces of each product, this eliminates a certain subsect of facilities that have 5,000 pieces as a sweet spot. Your product assortment alone may conversely rule out a facility that can produce smaller runs. I once asked a facility if they could manufacture a cleanser for a customer. I was surprised to hear this was the only skincare category they didn’t produce. It turns out, they don’t like to run surfactant systems through their filling equipment. It saved a bunch of time for the client to just move onto the next partner.

4. What is your sweet spot?

I once worked on a project that had a variety of sizes for the same product—sample sizes all the way up to gallons. The pricing on the retail size, 10 oz., was fantastic. The gallons were exponentially more costly. Upon probing what drove the cost variance outside of the raw materials, they expressed it took a significant amount of time and personnel to fill the gallons—7 minutes per gallon! I was shocked because this facility told us they could fill gallons. Even though the retail bottles were filled lickety-split, it turns out they were horribly efficient at the gallon sizes true—an obvious weak spot.

This begs the question, what is their sweet spot? What could they do all day, every day, delivering the best value to the customer? As exemplified, a lack of true capability does impact price. Acknowledging what they are and aren’t good at can lead to more creative conversations, such as how to get the bulk you need to an efficient filling partner.

5. How big is your quality team?

A manufacturing facility without a strong quality unit is a quality issue waiting to happen. What good is the best pricing or quickest production times if there are few quality measures placed around the production of a product? I also oversaw quality in my previous life at a salon professional brand—even with the best quality departments, stuff happens. Imagine having fewer guardrails in place!

I once took part in a facility audit. One question was asked, “how big is your quality team?” The manager answered something crazy like 42 people. After surveying the room, we were a little perplexed that they had so many employees in their quality unit. Upon seeing our confusion, he smiled and stated, “every person in this building is responsible for quality and raising issues.” Wow, what a great culture! 

Ask your prospect manufacturer what portion of their facility is dedicated to quality? Who on their staff is responsible for quality? What’s the staff member’s experience in the industry? If they have no background, it’s not necessarily alarming. Aside from also asking if they have a third-party certification, such as GMP or ISO 22716, ask to see a summary of their standard operating procedures.

How many times a year do they self-audit? How do they evaluate incoming raw materials? Learn about their water system and how they maintain ongoing water quality. Upon production, what are their quality measures? How long do they keep retains of your production? Do they provide certificates of analysis for each batch on shipment? Ask for the SOPs!

I would also ask how they handle quality issues. What is their process for Corrective and Preventative Action (CAPA)? Can they provide an example of quality issues they’ve experienced and the corresponding corrective actions for them? Are there continual trainings or is any of the production leadership LEAN certified? Do they have a history of FDA visits, and what were the outcomes? Have they ever had a recall for a brand from their facility? No facility is perfect, there is always room for improvement!

Hand-in-hand with quality is regulatory. There aren’t just international or federal laws to worry about—many individual states are creating their own laws and it’s important for the manufacturer to be your industry advocate and engage in continuous monitoring on your behalf. Ask if they’re a member of the Independent Beauty Association, a wonderful organization for small to medium brands that provides advocacy support for contract manufacturers and brands alike.

Other Considerations

Hundreds of other questions flood my mind—in no way can this column be fully comprehensive or be able to explain the manufacturer’s perspective, which is an important lens to look through. After all, it’s their company and they’re providing the service for you! There is a reason to how their business is structured, and any arrangement needs to work for both parties! There are plenty of manufacturers out there. 

If you are still unsure you can navigate this alone, there are dozens of consultants with tenure in the industry that you can engage with to make the product development process as seamless as possible. And now, I leave you with my rambling thoughts of final considerations!

• How is account management set up and what is the typical communication structure to the customer?
• How is financial stability? Do they have trade references to vendors they can supply?
• What is employee turnover like?
• What kind of transparency is available on production records, raw materials used, etc.?
• How often are formulations repriced? What transparency is available to the customer on reasons for increases? Are decreases ever offered if the market rebounds?
• How are ingredient discontinuations and supplier changes notified to the customer?
• What are the required tests and who covers those fees?
• If you’re providing the formulation or other intellectual property, what systems are in place to protect it?

Obviously, there’s a lot to think about and a lot of questions to ask when you’re searching for a contract manufacturing partner. But follow my advice and you’ll find a match that works!

Valerie George

askvalerie@icloud.com

Valerie George is a cosmetic chemist, science communicator, educator, leader, and avid proponent of transparency in the beauty industry. She works on the latest research in hair color and hair care at her company, Simply Formulas, and is the co-host of The Beauty Brains podcast. You can find her on Instagram at @cosmetic_chemist or showcasing her favorite ingredients to small brands and home formulators at simply-ingredients.com