Should Your Company Consider Toll Manufacturing?
Manufacturing can be so expensive, such that if your business is trying to
venture into a new product, you will need some very pricey equipment for
production. Toll manufacturing is a good way to get into product manufacturing
without the expensive capital outlay. This is especially applicable for such
operations as chemical products manufacturing.
Because of the complex business systems and aggressive competitiveness in the
market right now, there now are companies that focus solely on toll
manufacturing. These companies deal only with distributors of the products and
not the consumers. Toll manufacturing is highly ideal for businesses such as
cleaning chemicals, wherein the manufacturer only handles the bulk
production of the products, and the contracted distributor handles everything
from the distribution to the marketing of the cleaning products. This
relationship is ideal for the distributing company as it saves time and money in
setting up a production facility with all the needed equipment and machines. The
toll manufacturer, for its part, gets to focus all its efforts on improving
product quality and in producing new innovative product lines.
Toll manufacturing is very good for companies that are testing the reception of
a new chemical product in the market. This also works well if the company has to
deal with small orders from customers and they do not have the proper equipment
and facilities. Chemical manufacturing normally involves heavy capital
investments for items such as reactors, centrifuges and driers. The production
also involves tedious research and development to produce high quality products
as well as obtaining ISO certification, which is very difficult to achieve. With
the production and the distribution handled by two different companies, the
efforts are more focused, resulting in higher quality products and more
effective methods of doing business.
Savings are also achieved by a contracting company because it does not need huge
facilities to house the needed equipment for the manufacturing process. Toll
manufacturing provides the contracting company access to experts in the field of
chemical product research as well as tried and tested production processes.
Chemical product manufacturing involves many variables such as the particle size
of the materials, heat sensitivity and other factors. It would be very expensive
to invest in such expertise, expert chemists who will see to the maintenance of
regulatory issues and quality control.
If you are testing out a few sample batches, then it would be wise to contract
the services of a toll manufacturer. A toll manufacturer may also be able to
handle the packaging and labelling aspects of the product manufacturing. This is
highly beneficial as it relieves your company of additional capital outlay. The
company can then focus on marketing and distribution to the target markets.