Outsourcing in-house processes and releasing capacity

Mark Riemer, Commercial Manager at SternMaid describes the benefits of outsourcing and the services that a good contract manufacturer must offer nowadays

KSR: How has the role of the contract manufacturer changed with time?

MR: Until a few years ago, the company profile of a contract manufacturer was simply a matter of production. Today, however, there is often a demand for experts who can offer an “all-round carefree package.” Modern contract manufacturing includes a diversity of tasks that go far beyond mere production: they range from mechanical packaging, packaging and labelling to quality assurance, warehousing, logistics and the procurement of raw materials.

Furthermore, the requirements in terms of plant technology, safety and documentation are becoming stricter all the time. As such, it’s sometimes easier to approach a specialised service provider. SternMaid offers a complete service chain for the blending, processing and filling of powdered food ingredients, food supplements and pharmaceutical excipients, all from one source. Customers can either make use of the whole package or choose individual services, depending on their needs.

KSR: What advantages does outsourcing offer?

MR: The greatest benefit is no doubt the time and cost savings. The customer is able to concentrate on their core business, such as research and development, for example, or marketing and sales. When companies realise that they can relieve the burden on their own firm by outsourcing some of their inherent processes, it’s often the first step towards co-operating with a contract manufacturer.

But there are other reasons for outsourcing, too, such as reacting to a instance a rapid increase in business or the extra value that can be acquired through specialist know-how.

Particularly when there is a shortage of skilled labour or even when temporary workers are hard to find, service providers can help to handle spikes in demand or safeguard a regular supply. Sometimes, too, special production technologies are needed that a company might not have or that cannot be introduced quickly within its own premises.

Mark Riemer, Commercial Manager, SternMaid

Plus, the installation of large plant has to be considered carefully these days. Caution is needed, especially with new or niche products. Who knows whether the plant will still be in full use in a few years’ time? That’s the point when contract manufacturers become more interesting.

KSR: What sort of companies benefit most from outsourcing?

MR: There is a wide range. First of all, outsourcing is an interesting option for firms that intend to expand but do not want to make additional investments. For firms or producers with a frequently changing product range, it can be challenging to install expensive plant or constantly update their technology.

After all, owning plant ties up capital, space and personnel. In addition, there are other companies that want to restructure their production activities and only outsource a part of it.

KSR: The decision to outsource is often a real challenge because, ultimately, it means relinquishing responsibility. How does SternMaid respond to that?

MR: Above all, our customers must be able to trust us. So, it’s important for us to demonstrate our competence as soon as the first enquiry is made. Our offer begins with consultancy. We arrange a personal meeting to explain the most efficient ways of integrating our services into the customer’s production process; and, during the planning stage, we regularly co-ordinate our activities.

That creates the basis for a good and lasting business relationship. Experience has shown that our reliability and our specialist knowledge in the field of powder handling are the main reasons for long-term collaborations with us.

KSR: What, in your mind, are the signs of a good contract manufacturer?

MR: If they are to assert themselves in the market, contract manufacturers must have a well developed infrastructure and qualified personnel, and they must be able to act independently. The most essential aspect is flexibility. If a company’s plant breaks down and we are asked to take over, we must be able to start within a few weeks.

In the pharmaceutical industry, the lead times are usually a bit longer because of the extensive documentation required. But in all cases, far-sighted planning is extremely important for contract manufacturers, because customers expect quality, punctual delivery and, above all, flexibility. Even short deadlines have to be met at the right time with top quality product.

Here, our warehouse capacity is always an advantage. We have the necessary space, so we can respond very flexibly to customer wishes.

KSR: What concrete help can you give your customers?

MR: Suppose a manufacturer receives an enquiry about an unusually large quantity, but their own packaging lines are already working to capacity. SternMaid can absorb such spikes and package the goods in the usual way. Another example is when companies take measures to modernise their production plant: while the work is being done, production can be outsourced to us.

New projects that don’t fit into existing production processes at the company’s own facility can also be outsourced — wholly or partially — until they achieve quantities that are economically viable.

And for well-known brand manufacturers in particular, it is becoming more and more important to have a second-supplier strategy to safeguard their own ability to deliver during unexpected situations or crises. In some cases, the amounts of certain raw materials ordered by our customers are just not large enough to obtain the best terms.

In that case, we can procure the materials as well as producing the goods on a contract basis. Through synergisms with our sister companies in the Stern-Wywiol Gruppe, we can achieve excellent purchasing terms. What’s more, some 800 different raw materials are available on call from our own warehouse.

KSR: What role does membership of the Stern-Wywiol Gruppe play?

MR: Through the network of firms in the Stern-Wywiol Gruppe, our customers benefit from a broad range of expertise in research and development. At this year’s CPhI Worldwide in Frankfurt, for example, we will be exhibiting with SternLife.

On our stand, potential customers will learn more about our comprehensive range of services in the field of contract manufacturing powdered products for medical conditions that require special nutrition, and the development of formulations and products at SternLife.

The Stern-Technology Center near Hamburg, with its 15 specialist laboratories, concentrates the necessary know-how under one roof and helps customers to develop innovative health and lifestyle products.

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