Here at Process Cat we usually talk about ways to improve your own manufacturing, but everybody sometimes decides outsourcing certain items is the right choice!
If you’re wondering how to make that determination, check out this article on core competencies!
Anyway, once you’ve decided that you’re going to use a contract manufacturer for a particular product, the next decision is…
What size contract manufacturer is best for this product?
Gary encountered this question when he decided to start offering merchandise at his bakery…
If you’re a regular PCat reader, you know that Gary owns a bakery.
All the baked goods are made in-house, whether by him or his employees. Because baking is his business’s core competency. But recently Gary decided that he wanted to offer some merchandise for a few reasons:
- To create an additional revenue stream
- To get his customers to identify with the brand and provide some free advertising
- (Let’s be honest and avoid the boring, practical business reasons): because it would be fun!
The first product Gary decided to offer was…
Yes, it’s true: people who like to buy baked goods also often like to make their own baked goods. So Gary decided to start offering his own baking pans which come with recipes for making the bakery’s special cake.
Now for this kind of product… it’s specialized. People are going to want high-quality and be willing to pay a higher price. And it’s not something that a lot of large manufacturers would necessarily offer.
So for this, Gary does some research and finds a fellow small-scale manufacturer who makes specialty sheet metal products. This is a person-to-person business relationship. Gary has to talk to a few people and use a bit of his charm to convince someone to work a little outside of his company’s standard offerings. It takes a bit of time it’s not the cheapest or easiest deal he’s ever done, but…
Ok, so that’s great for the pan. But is there ever a time when it’s better to go with a mass-market, “off-the-shelf” contract manufacturer?
Glad you asked 😉
Gary also has another group of loyal customers at his shop who have no interest whatsoever in making their own baked goods. Many of them use their ovens to store sweaters, this being New York City. But he has an idea for a product he can offer them too:
Mugs!!
Yes, coffee mugs. Coffee is one of the most popular beverages in the world, and science* tells us that coffee is especially great when paired with cookies. So Gary decides to offer coffee mugs with his logo on them, just as a simple way to keep his bakery top-of-mind for people while hopefully making a little extra cash.
So should he do the same as before, look for a local potter that he can commission to make special mugs?
That’s certainly one option but in this case, it may be better to go with a mass manufacturer who offers mass customization. Gary decides to go this route for a two main reasons:
- It’s easier
- It’s cheaper
And you know what?
Weekly Challenge:
Next time you decide to get something made by a contract manufacturer, think about what type of manufacturer you should use! You may make different decisions about which things to just order from a large, faceless mass-customizer vs. which to specialty-order from a fellow small business owner. But the point is, spend some time thinking about the decision and you’ll come out ahead!
*By “science,” I mean me.
