Home > contract manufacturing > How A Toll Milling Agreement Works

toll milling agreementBefore you make a toll milling agreement, stop here! We have the information you need to know before you move forward with committing to an official agreement (and manufacturer). From how toll milling works to its benefits, look no further. We’ve got you covered.

What is toll milling? What is a toll milling agreement?

Before you even begin thinking about a toll milling agreement, let’s look into the toll milling process and how it works. Firstly, you won’t always see it referred to as “toll milling”. You may see the terms “toll manufacturing” and “toll processing” thrown around as well. Ultimately, these terms all refer to the same basic procedure. Some simply call it “tolling”.

No matter what, the process essentially involves a third party covering a custom milling, mixing, or blending service of a client’s product. The client pays a fee or “toll” for these services. When you make a toll milling agreement, you’re essentially committing to pay that fee, while the toll manufacturer in turn commits to delivering on the services you require. It’s as simple is that.

This falls under a larger umbrella of services referred to as third-party manufacturing. Of course, toll milling is not the only form of third-party manufacturing on the market. Another one you may hear of frequently is contract manufacturing. On paper, the two are fairly similar. But in reality, there are a few key differences we want you to be aware of.

Both involve the third party handling a service for you, in exchange for a fee. However, a contract manufacturer will not only take care of the service, but the “ingredients” as well. This means that you don’t have to source the raw materials. You will do that for a toll manufacturer. While this works for some business owners, it’s not the right solution for everyone.

Why choose a toll manufacturer over a contract manufacturer?

Here’s one of the main reasons why business owners choose a toll milling agreement over contract manufacturing: control. Yes, you can hammer out some of the processing details with a contract manufacturer ahead of time, but you have no control over the raw materials used. For some business owners, that’s a big part of quality control. Raw materials are important, and while you can certainly trust that a reliable contract manufacturer won’t skimp on good materials, you cannot tell them specifically what to choose.

 A toll processor, on the other hand, allows you to provide the materials yourself. They come from your source and therefore adhere to your specifications. Additionally, this may affect not only the quality of the work done, but the cost of the work as well. Some raw materials are more expensive than others. Furthermore, if you have a preexisting agreement with a source, you may be able to get a deal on raw materials that cuts down on your overall costs.

No matter what, if you have the raw materials covered and simply need to outsource the manufacturing, toll milling may be a better fit for your needs than contract manufacturing.

What are the benefits of toll milling?

The above scenario is just one of the benefits of toll milling. There are many reasons why business owners choose this process, among them:

  • Obviously, it’s important to keep costs down whenever possible as you manufacture products—while not cutting the quality of your production. When you make a toll milling agreement with a manufacturer, you do not need to invest in the manufacturing equipment. Nor do you need to worry about the equipment depreciating over time. Additionally, you don’t need to invest in floor space or manpower. Emergency repairs and spare parts aren’t a worry. All of this expense is on the toll manufacturer. You’re simply paying for the processing service.
  • The reality is that manufacturing equipment and processes are not one-size-fits-all. You may need more than one type of equipment, and you may need to execute multiple processes for one order. A toll manufacturer has the ability to do this without issue. You get the variation you need, while not having to worry about the complications that can come with handling various procedures yourself. We can configure milling systems in particular for one- or multi-pass systems.
  • It’s relatively easy for toll manufacturers to scale processes up and down as needed. Additionally, they can downsize as needed. You may make a toll milling agreement for one order that requests a large scale production; another may be significantly smaller. It can be difficult to accommodate this on an individual level, but a toll manufacturer prepares for this possibility.
  • Quality control. Again, we can’t downplay the experience of solid toll manufacturers. They’re not only efficient, but prepared to conduct quality control procedures, from lab analytics to regular inspections.
  • You may need an order delivered on short notice. While it’s often difficult to execute this on your own, third-party manufacturers are ready and waiting. Again, all you need to do is provide the raw materials.
  • You may not be familiar with the regulations required for your desired order—an experienced toll manufacturer is.

Looking for more information on toll milling and what a toll milling agreement looks like? Give CTI a call at 419-924-5566 or contact us here. We’re ready to talk you through this process, give you the answers you’re seeking, and perhaps even provide necessary services.