Companies with the rights to certain products and formulas may lack the manufacturing infrastructure to actually produce these goods or do so at the necessary scale. Such businesses often turn to the toll manufacturing production method.
But what is toll manufacturing? Industrial toll manufacturing companies are external service providers that handle the production of your goods for you. As a result, your company can focus on and free up funds for research and development, branding, and other crucial elements of running your business while outsourcing your manufacturing needs. These third-party service partners already have the equipment, space, and experienced staff in place to handle production.
Some of the most common end products that toll manufacturing services generate include:
- Cable, wiring, and related electrical components
- Consumer products
- Consumable goods like food, beverages, and pharmaceuticals
Learn more about the advantages toll manufacturing can offer your organization, some of the challenges to navigate, and how Micro-Tek can help.
Advantages of Toll Manufacturing
Toll or tolling manufacturing offers immediate benefits for any company considering using this approach. It’s simple, versatile, and can easily align with virtually any company’s business plan. Some of the key advantages of toll manufacturing include:
- Access to extensive resources right away. In-house manufacturing capabilities are often extremely limited, especially for smaller organizations. Every change in your processes or product line requires additional time, money, insurance, industrial equipment, space, and trained labor. Toll manufacturing service providers already have these resources available and waiting to begin fulfilling your needs.
- Flexible operations and manufacturing capabilities. The above factors also allow you to quickly change products, volume, and more for better scalability and versatility. Your order volumes can change based on seasonality, outreach to new markets, or potential market downturns.
- Minimized risk. Producing products, especially critical or consumable goods, in-house leaves your organization fully liable for any flaws in production or contamination. By working with a toll manufacturing company, you reduce the direct business risks for your own organization. Toll manufacturers will already have the certifications necessary to meet your industry’s production standards and will be familiar in compliance with required regulatory standards.
- Lower financial investment. Initial investments in equipment and specialized staff can be extremely cost-prohibitive. With toll manufacturing, you face fewer overhead costs for inventory, storage, equipment maintenance and repair, technicians, and the staff necessary to keep everything moving. Instead, you have variable costs that align with the scale of production.
Challenges and Considerations
While toll manufacturing offers an ideal solution for many companies, this approach does pose potential challenges that you should carefully consider before moving forward. These include:
- Dependence. When your company relies on third-party manufacturers, you don’t have direct control over scheduling, operations, and production processes. It’s vital to maintain clear, open communication with all partners, setting forth predetermined expectations to minimize conflict and lessen the chance of surprises. That said, you should ideally still have backup manufacturer relationships ready in case your primary source has supply chain difficulties or goes out of business.
- Protecting your intellectual property. In toll manufacturing arrangements, your company holds the IP for formulas, products, etc. Toll manufacturers, however, will need access to this information to produce your goods. This does open your organization up for potential IP theft, jeopardizing confidential information. It’s important to find a toll manufacturing service that takes IP protection seriously, guarding private details from unauthorized staff or organizations.
- Quality control and assurance. While the manufacturer may hold the majority of the responsibility for complying with industrial regulations, your company also holds some risk. You need to be sure the toll manufacturing provider is compliant with industry regulations, has proven quality control processes in place, and is otherwise a safe choice for upholding your brand’s reputation.
Toll Manufacturing by Micro-Tek Corporation
Outsourcing your manufacturing processes offers you the flexibility to scale your business, all without the high initial investment and overall risk of acquiring new equipment, staff, and facility space. At family-owned Micro-Tek, we specialize in custom fine wire, cable, and tubing manufacturing and offer reliable, high-quality toll manufacturing services with on-time delivery to our clients worldwide. Our expert team works from Micro-Tek’s 27,000-square-foot facility in New Jersey, which we’ve equipped with the machinery necessary to handle a wide range of toll manufacturing end products tailored to your unique specifications.