Manufacturing analysis: the framework

One of the most common questions a burgeoning food company must discern is whether to self-manufacture or enlist a contract manufacturer. This is a nuanced topic, and each product endeavor requires a tailored solution to provide the greatest chance of commercial success.

This framework can be used for a comparative analysis and will help drive consensus towards an actionable path forward.

Category	Contract manufacturing	Self-manufacturing
Capital expense	Typically, it requires less upfront investment as you're not purchasing machinery or infrastructure.	Requires higher capital expenditure for machinery, infrastructure, and initial setup.
Operational expense	No direct equipment maintenance costs. Pricing can be negotiated based on volume.	Ongoing operational, maintenance, and labor costs.
Timing	Faster to market, with the critical path dependent on partner securement and supply chain activation	Facility securement, permitting, and infrastructure/process build-out introduce risk to the commercialization timeline.
Quality control	Dependence on third parties for quality assurance.  Potential inconsistency between batches.  Need for strong quality agreements and regular audits.	Direct responsibility for quality processes.  Real-time monitoring and adjustments are possible.  Easier to implement changes or improvements.
Flexibility and scalability	Faster scalability if the manufacturer has capacity.  Less flexible for last-minute changes or customizations.	Flexibility in production adjustments.  Scalability can be limited by infrastructure and requires capital investment.
Supply chain	Potential for faster turnaround if the manufacturer has inventory or capacity.  Reliance on third-party's supply chain.	Direct control over inventory and lead times.  Entire supply chain management responsibility.
Intellectual property [IP] and confidentiality	Risk of IP exposure.  Need for strong confidentiality agreements.	Better control and protection of IP.  No need to share proprietary information externally.
Skills and expertise	Access to the manufacturer's specialized expertise and experience.  Reduced need for in-house expertise.	Need for skilled labor and expertise.  Opportunity to build and nurture in-house talent.

Every food company must determine which model aligns best with their strategic goals, financial capabilities, and risk tolerance.  Ultimately, the decision rests on a combination of factors. Evaluating each based on the company's unique situation is essential to making an informed decision.