Understand contract manufacturing for food processing businesses

Contract manufacturing can be:

• outward – your business supplies a product or service to another business
• or
• inward – your business contracts another business to produce part of your product or supply a service to you.

Understanding why and how businesses in Queensland's food processing industry contract manufacturing work out or in will give you key information to help you with many areas of your business.

Benefits to your business

You may find that outsourcing products, components or services will help your food processing business to remain competitive during start-up or growth periods. For instance, having a product bottled or packaged by another business under contract may eliminate the need to invest significantly in extensive equipment or additional staff when cash flow is tight.

Some small food manufacturers find that outsourcing work to a well-equipped business is a better strategy than bearing the cost of putting in a bottling or packaging line.

The other side of contract manufacturing is it allows well-resourced businesses to better use their equipment and staff during downtime.

Business planning

Knowing why businesses in your industry use contract manufacturing, and the benefits it provides them, is essential information that can help you to better plan and run your business.

Understanding what the expectations for your business are will make it easier for you to write and update your business plan.

Contact industry associations for help with networking, training and other opportunities.

Benchmarking

Benchmarking your business involves comparing it to other businesses in your industry. Consider how you use contract manufacturing - or how you plan to use it. This helps you to identify where businesses are making good choices that you would like to replicate, or where you feel you could improve by doing something differently.