A private label manufacturer, often referred to as a contract manufacturer or white-label manufacturer, specializes in producing goods for other companies (often retailers or brand owners) under their brand name or label.
The core function of a private label manufacturer is to manufacture products according to the specifications, quality standards, and branding requirements of their clients.
Challenges Faced by Private Label Manufacturers
Private label manufacturers in the food, chemical, and nutraceutical industries share a few common challenges that can be addressed by running a formula-based, process manufacturing ERP solution.
The private label manufacturing industry is often highly competitive, with multiple players vying for contracts. Staying competitive may require continuous innovation and cost optimization, which means the company’s software solution must have the means to streamline and scale up operations, quickly, easily and most cost effectively. The net result is being able to meet customer demands in terms of volume, costs, and delivery times.
Determining the right production capacity to meet client demands without overproducing or underproducing can be challenging. Overproduction can lead to excess inventory and increased costs, while underproduction can result in missed sales opportunities. With advanced, automated planning and scheduling tools, like MPS and MRP, companies can be more just in time and better balance inventory levels to meet customer demand.
Keeping production costs in check is essential to maintain competitiveness. Balancing cost-effectiveness with quality can be a constant challenge, especially in industries with fluctuating raw material prices or labor costs. Advanced product development modules consider ingredient, packaging, and consumable costs, as well as fixed and variable labor costs, shipping, and miscellaneous costs, when calculating the estimated cost for intermediate and finished goods.
Maintaining consistent product quality is crucial for private label manufacturers. They need to ensure that their products meet the standards and specifications set by their clients (retailers or brands). Failure to do so can lead to reputational damage and contract terminations. Managing customer specific QC tests and instructions (SOP’s) during the ‘Make’ and ‘Fill’ stages of batch production, as well as generating customer specific COA documentation are all standard functions supported by an advanced process manufacturing ERP solution.
BatchMaster ERP Advantages for Private Label Manufacturers
Private label manufacturing allows brands and retailers to focus on marketing, sales, and brand development without the need for extensive manufacturing facilities and capabilities. BatchMaster ERP enables process manufacturers to bring a wide range of products to market quickly using these major software features:
Client Relationship Management
Building and maintaining strong relationships with clients is paramount. Effective communication and collaboration are key to understanding and meeting one’s client’s needs and expectations.
- Inbuilt CRM features manages customer profiles, customer product concepts and sales opportunities.
- Client Collaboration facilitates communication and collaboration with private label clients managing production schedules, changes, and other specific requirements.
Private label manufacturers work closely with their clients to develop and design products that meet the client’s requirements. This may involve creating new products from scratch or customizing existing formulation management.
- Formulation allows the creation and storage of formulations tailored to each private label client’s requirements. Private label manufacturers often deal with proprietary product formulations and designs, and therefore only specific users will be given proper security access to certain specifications.
- Formulation Variation enables the adjustment of formulations to accommodate variations in ingredients, quantities, or other characteristics based on private-label client preferences.
- Packaging & Label Customization allows effective packaging sizes, labeling, and design to match private label clients’ branding.
- Approval Workflows provides user definable workflows for staff and private label clients to review and approve formulations before production, ensuring alignment with their branding and quality standards.
Private label manufacturers typically procure the necessary raw materials and components required for the production process and inventory management. This includes identifying reliable suppliers, negotiating contracts, and managing the supply chain to ensure a steady flow of materials. In some cases, private label manufacturers may be responsible for managing inventory levels to ensure that products are readily available to meet client demand without overstocking or running out of stock.
- Supplier Collaboration allows seamless communication among suppliers to ensure on-time delivery of raw materials and components for private label products.
- SKU Management enables the creation and management of unique Stock Keeping Units (SKUs) for each private label product variant.
- Product Segmentation tracks stock levels and manages each product line separately. It allows the company to categorize and segregate inventory based on private-label products.
- Reorder Point and Safety Stock Levels are set for each private label product to ensure that its inventory is replenished.
- FIFO/LIFO Management manages expiration date rotation and inventory valuation methods according to the company’s accounting practices.
Planning & Scheduling
Private label manufacturers need to manage private label orders separately, allowing for tailored planning and scheduling based on the client’s requirements.
- MPS generates production plans for private label products, considering factors like available resources, lead times, and demand variations from other clients.
- MRP analyzes the production schedule and generates material requirements lists for private label products, making other components available.
Private label manufacturers need to be adaptable to changes in batch production volumes and delivery schedules to accommodate their clients’ needs.
- Scaling batch jobs can be performed based upon various criteria, including the quantity of raw materials available.
- For the ‘Make’ process, Batch Production can manage and optimize the production of a specific product that is filled in a variety of packaging configurations.
- For the ‘Fill’ process, Batch Production can manage and optimize the packaging and labeling of products, according to each private label client’s branding.
Private label manufacturers implement quality control measures to ensure that every product produced meets the specified standards and quality benchmarks set by their clients.
- Client-Specific Quality Plans define the quality instructions, QC tests, stability tests, and inspections and checklists needed for their client’s raw materials, intermediates, and finished goods.
- Client-Specific Quality Reporting includes customized COA’s as well as quality dashboards that offer insights into product quality, defects, trends, and compliance for each private label client.
Private label manufacturers are employing BatchMaster ERP because it is adaptable to changes in product specifications, production volumes, and delivery schedules to accommodate their clients’ evolving needs. In addition, the ERP software ensures that their clients’ products comply with industry-specific regulations, safety standards, and labeling requirements.
Learn more about how BatchMaster ERP can help you manage your private labeling business by scheduling a discovery call with our solutions consultants, Contact us today !