Contract Manufacturing Simplified!

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Contract Manufacturing

Are you a Contract Manufacturer? Are business complexities becoming difficult to handle? Yes? Then, this blog is definitely for you!

Finally, it’s raining orders for contract manufacturing units! Blame it on the increasing outsourcing of operations that are doubling the order book for contract manufacturers (CMs). However, contrary to earlier practices when a product went to different CMs for different work that led to verification, communication, testing, quality and visibility issues, OEMs are now looking for a CM who can handle all operations and is available for direct talks too. The rules are further changed with OEMs expecting products that are of better quality, but in lower price plus are manufactured with ethical business practices and respect for the environment.

This sudden realization of the changed way of working and higher getting product expectations takes away all the smiles of the contract manufacturers. The realization further deepens with their old-school way of working posing numerous challenges in front of them. Leading them to find a support that could

  • Optimize operations
  • Keep a check on quality & compliance
  • Document everything
  • Offer greater visibility
  • Accurately calculate service and other charges
  • Identify and control waste
  • Give the ability to respond quickly to customer changes and queries, and do much more.

And, an ERP software can be that support.

However, not just any ERP will do…

Contract manufacturing industries need software flexible enough to cater to the requirements of different customers. With unique business requirements, they need to move from paper-based functioning to an automated system (read: an ERP). This will not only reduce the risk of errors but also could meet their other challenges like:

-Efficient Planning

Unlike other manufacturers, contract manufacturers are one step away from the needs of end customers. So, driving the perfect planning and maintaining the right balance between demand and supply is a challenge for them.

-Visibility into consigned inventory

Some customers buy the inventory and consign it to contract manufacturers, while some want contract manufacturers to own inventory of their own. Now, when inventory is consigned to the manufacturer, it should not appear on the manufacturer’s balance sheet. This demands a system that should provide segregation of both the types of inventory.

-Shipment with supplier lot tracking

Contract manufacturers may have inventory in the warehouse that belongs to different customers. To avoid mixing up of materials, manufacturers need to ensure that the finished good for a particular customer is made out of the formula provided by the customer and the raw material lots provided from the same customer.

In case of sales returns, or product recalls, or imply quality failed goods, it becomes imperative to identify the root cause and the defective lots. Without lot tracking, the contract manufacturer would have to use cumbersome manual procedures to identify the bad inputs which may be both time consuming and error-prone.

-Automated Quoting

Different customers, different requirements for manufacturing needs every time. This emerges the requirement of maintaining flexible quotations.

-Being responsive to change

Customers may bring out new products which may require a slight change in the BOM. For this reason, the ability to copy an existing BOM or routing and then just make the changes necessary for the new item proves beneficial. That can save time and entry errors.

-Revision control

The manufacturer may change the formula with time, so it is essential to maintain version and revision control. This also helps to be in sync with customer requirements.

-Compliance with cGMP

Manufacturers have to successfully meet cGMP and assure delivering high quality, FDA, ICH and WHO-compliant products.

– Service charge

Manufacturers have to calculate service charges when the material is provided to them by customers. They need to make time-consuming and complex calculations for determining the cost per product per batch.

If this is your business, you need an ERP system that understands your needs and supports the requirements of contract manufacturing.

Meet BatchMaster Meeting Contract Manufacturing Needs…

Built with a clear focus and strong foundation of industry knowledge, BatchMaster has a proven, successful track record of providing a perfect ERP solution to the contract manufacturers. This full-featured ERP integrates well with the business workflow and provides greater visibility and stronger control of the supply chain.

Mr. Manish Jain, IT Manager, Syncom Healthcare, India- “BatchMaster understands third-party contract manufacturing and loan licensing needs. It helped us to achieve inventory accuracy and cost clarity with minimal efforts.”

For reducing the risk of compliance, BatchMaster helps contract manufacturers adopt quality-related processes. They can define their own or customer-defined tests, apply them at every required point in the supply chain right from entry as raw materials to exit as finished goods. As a result, complying with global FDA’s 21 CFR Part 11 as well as the cGMP regulations, other regional and country-specific regulations becomes easy. It even supports NC and CAPA. Further, accurate MPS/MRP, Advanced Production Batch Planning, Forecasting, etc. help in meeting dynamic demands of multiple customers. To help manufacturers address variable customer requirement, BatchMaster incorporates a robust Sales module. Right from tracking customer requirement, generating invoices to shipping orders, it is a perfect fit. Segregating and tracking inventory based on OEMs, procurement from the certified vendor, and movement of material as per cGMP help quickly and accurately identify owned and consigned inventory. Extensive formula record with keen tracking of formula versions and approval process assures correct and secured formula management. Accurate and quick costing calculations speed up determining the affordable yet profitable cost of the product.

Additionally, BatchMaster is even aware of the different types of contract manufacturing models and supports all!

Conclusion:

Contract manufacturers work on razor thin margins. Manual methods and invisibility to cost or wastages plus performance bottlenecks can drag them behind their competitors. What they need to do is-improve productivity, cut waste, and avoid the risk of errors plus non-compliance. In short, they need to opt a right ERP that is designed keeping their needs in mind.