In general, contract manufacturers are actually optimised to produce diverse and different products quickly and efficiently. However, this focus on low manufacturing costs often leads to very large batch sizes and thus indirectly to very long lead times for production.

If the selection of the contract manufacturer is exclusively focussed on "costs", it is very easy to get caught in a vicious circle of very large manufacturer lots, long replenishment cycles and, as a result, very poor flexibility in manufacturing. Which company can predict with a high degree of certainty the sales figures for the year after next?

The order of the day in most, if not all, companies is short-term rescheduling, changes in sales volumes in various markets due to, for example, regulatory changes or price changes, or simply changes in the priority of products.

On the whole, one is therefore usually better off with CMOs that can offer shorter replenishment times. The manufacturing costs are higher, but the risk that the goods in the warehouse already lose a large part of their value (due to the limited shelf life) is significantly reduced.

It often happens, for example, that packages have to be adapted due to regulatory changes. If you then still have large quantities of your product in stock because your contract manufacturer only produces competitively in very large batch sizes, you will of course write a large loss here.

Manufacturing costs, batch sizes, minimum order quantities, flexibility in production planning are a very delicate mix that has to be redefined for each product and each contract manufacturer.

When transferring an existing production to a new supplier, costs are incurred that are usually not directly attributed to the transfer but should be considered for the overall profitability. These include, for example, the cost of technical batches at the new supplier, adapting the manufacturing method to the equipment and procedures of the contract manufacturer, costs for validations, costs for changing the registration dossier and the largest cost item:

the duration of the transfer project including the costs of all departments and persons involved. During the project period, costs are incurred twice. Once in the company's own production, which it has not yet transferred, and the entire transfer costs including trials in the new production facility. It is this period in particular, together with the associated activities, that decides to a large extent on the total costs of the production transfer and on the success or failure of the outsourcing.

It is therefore of paramount importance to carefully plan and quickly execute such outsourcing production transfers. The differences between a quick, clean production transfer and a relatively elaborate, multi-year project could quickly exceed millions.