Last updated on Jul 8, 2024

How do you balance the benefits and risks of contract manufacturing for your product portfolio?

Contract manufacturing (CM) is a common strategy for businesses that want to outsource the production of their products to third-party vendors. CM can offer many benefits, such as lower costs, faster time to market, higher quality, and access to specialized skills and technologies. However, CM also involves some risks, such as loss of control, intellectual property theft, quality issues, and supplier dependency. How do you balance the benefits and risks of CM for your product portfolio? Here are some tips to help you make informed decisions and manage your CM relationships effectively.

1 Assess your needs

Before you choose a CM partner, you need to assess your own needs and goals. What are your core competencies and competitive advantages? What are your product specifications and requirements? What are your budget and timeline constraints? How much control and flexibility do you need over the production process? By answering these questions, you can identify the type and level of CM service that suits your product portfolio best.

Add your perspective

Atishay Jatia

Director - Renown Pharmaceuticals - Contract Soft Gelatin Capsules Manufacturer | 25+ Countries | 300+ Products | 150+ Customers | 200+ Employees | 10+ Years in this field
Report contribution
As per my experience below are some benefits and risks of CM. but there are ways to overcome it. Benefits Cost Reduction Faster Time to Market Compliance Expertise Scalability and Flexibility Access to Specialized Capabilities Risks Loss of Control Intellectual Property (IP) Theft Quality Issues Supply Chain Disruptions

Like
Bruce Gardner

Aseptic Fill Consultant | Quality Oversight | Tech Transfer | Manufacturing Support | Process Development
Report contribution
The answer to “How much control and flexibility do you need over the production process?” should be based on your risk assessment of the manufacturing process. The risk assessment should take into account the limitations of the process characterization to date and what process characterization the CM will need to perform (non-scale/non-equipment specific and scale/equipment specific).

Like

2 Do your research

Once you have a clear idea of your needs, you need to do your research on potential CM partners. You should look for CMs that have relevant experience, expertise, and reputation in your industry and product category. You should also check their quality standards, certifications, and compliance records. Additionally, you should evaluate their financial stability, operational capacity, and communication skills. You can use various sources of information, such as referrals, reviews, testimonials, case studies, and site visits, to verify the CMs' credentials and performance.

Add your perspective

Bruce Gardner

Aseptic Fill Consultant | Quality Oversight | Tech Transfer | Manufacturing Support | Process Development
Report contribution
Know the limitations of each candidate CM. Based on their equipment and practices, how would their manufacturing process differ from the current process? How much experience do they have with similar processes? How well can they assist with process characterization for your product/process? What assays can they perform in-house? Can they support stability studies? Due they have sufficient cold storage? Once you have a short list of potential CM partners, consider setting up confidentiality agreements and then asking each of them how they would address the identified risks/critical steps.

Like

3 Negotiate the contract

After you narrow down your list of CM candidates, you need to negotiate the contract with your chosen CM partner. The contract should clearly define the scope, terms, and expectations of the CM service, as well as the roles and responsibilities of both parties. You should also include clauses that protect your intellectual property rights, confidentiality, and liability. Furthermore, you should establish the payment terms, delivery schedules, quality standards, and performance indicators that will govern the CM relationship.

Add your perspective

William Madden, PhD

Co-Founder at Whole Brain Consulting
Report contribution
Remember: Choice of law, recalls, and insurance. Don't negotiate on your own. If you hired a consultant then use them for help. Always make sure you have a lawyer review the final product.

Like
Bruce Gardner

Aseptic Fill Consultant | Quality Oversight | Tech Transfer | Manufacturing Support | Process Development
Report contribution
These negotiations should include generating a quality agreement based on input from all of the major stakeholders on both sides.

Like

4 Monitor the process

Once you sign the contract, you need to monitor the CM process closely and regularly. You should communicate with your CM partner frequently and transparently, and provide them with feedback and support. You should also track the progress, quality, and costs of the CM service, and compare them with the agreed benchmarks and goals. Moreover, you should audit the CM partner's facilities, practices, and records periodically, and address any issues or concerns promptly.

Add your perspective

5 Evaluate the results

Finally, you need to evaluate the results of the CM service and its impact on your product portfolio. You should measure the outcomes, benefits, and risks of the CM service, and analyze how they align with your needs and goals. You should also solicit feedback from your customers, stakeholders, and employees on the quality, performance, and satisfaction of your products. Additionally, you should review the contract and the CM relationship, and identify the strengths, weaknesses, opportunities, and threats for improvement.

Add your perspective

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

Add your perspective

How do you balance the benefits and risks of contract manufacturing for your product portfolio?

1

2

3

4

5

6

1 Assess your needs

2 Do your research

3 Negotiate the contract

4 Monitor the process

5 Evaluate the results

6 Here’s what else to consider

Contract Manufacturing

Rate this article

Thanks for your feedback

More articles on Contract Manufacturing

More relevant reading