Tolling Manufacturing: Is It Right For My Business?
As a small, or even large, business owner, you may need a product manufactured in large quantities, without having the resources on hand to manufacture it yourself. In this case, you may want to look into tolling manufacturing. While toiling manufacturing is not the only third party option you may seek, it is among the best.
What Does “Tolling” A Product Mean?
Tolling a product involves working with a third party manufacturer to have a product made. The third party is the tolling manufacturer, and you’ll make an agreement with them that outlines the product needed, how much of it is required, and which materials you’ll use. During the initial consulting process, you’ll be able to specify what you need and voice any concerns you may have about the product the manufacturer delivers.
Typically, we use tolling manufacturing because the small business owner does not have the resources to manufacture the product in house. Toll manufacturers have specialized plants where they manufacture products. Additionally, they possess the equipment necessary to refine and process raw materials, as well as employees trained and ready to use them. This can be a major investment for a small business owner, especially when they’re first starting out. For many small business owners, the cost that would come with designating a space for manufacturing, investing in equipment, and hiring and training specialized employees isn’t something they can justify. Furthermore, if the product run you seek is a single run, there is no point in buying permanent equipment or hiring permanent employees.
Tolling manufacturing is not the only form of third party manufacturing, however. Contract manufacturing is another option available.
What Are the Main Differences Between Tolling Manufacturing and Contract Manufacturing?
You’ll frequently see tolling manufacturing mentioned in comparison to contract manufacturing. This is because the two processes are among the most common forms of third party manufacturing utilized by small business owners. On paper, they may seem fairly similar. However, they have some key differences that we cannot ignore.
Contract Manufacturing is Beginning to End
When you sign a contract with a contract manufacturer, you are committing to working with them from the beginning of the process to the end of the process. What this means is that the contract manufacturer has more control over the manufacturing process. They will decide on and procure the materials used, will handle the manufacturing, and will deliver the final product. You will be largely uninvolved.
You Procure Raw Materials for Tolling Manufacturers
As you might imagine, tolling manufacturing differs from contract manufacturing in that you are more involved. One of the main ways in which you are more involved with tolling manufacturing is through the procurement of raw materials. Rather than relying on the manufacturer to make that choice, you can select the materials you like and direct the manufacturer to use them.
You Implement Design Plans
Another way in which you stay involved with tolling manufacturing is through design. The design plans used during the process are yours, rather than those of the third party manufacturer. Again, this emphasizes your level of control, and it also ensures that you receive a product in the manner you want, rather than the way the manufacturer prefers. You must always work with a reliable manufacturer that you trust. However, the manufacturers are the experts in making the product. You should have the ability to empower yourself to act as the expert in the product desired.
What Are the Benefits of Tolling Manufacturing?
To be clear, there are benefits that come with contract manufacturing and there are benefits that come with tolling manufacturing. However, contract manufacturing is not the right choice for certain tasks, and we cannot ignore the benefits that come with tolling manufacturing, especially if you’re working on more complex projects.
As mentioned previously, contract manufacturers work from beginning to end and have almost complete control of the process. This means that you can’t sign off on the materials used, nor the design plans. You are paying for a product that you don’t have much say over. While this isn’t as much of an issue with more basic products, the more specific your order, the more control you’ll want to have.
You Select the Raw Materials
Raw materials are incredibly important in manufacturing, and the more you’re able to select your own raw materials, the better. This plays into the element of control; however, it’s often simply a practical and convenient choice as well. If you’ve already selected a raw material supplier, you can direct the manufacturer to your supplier and ensure that the process is easier for everyone involved.
Finally, because you’ll be selecting the raw materials and the design plans, you will have more control over the cost of the project. When a contract manufacturer selects raw materials for you, the cost of the raw materials is figured into the cost of the overall product. If you’d like to pay more for a material you consider higher quality, you can do that. Conversely, if you’d prefer to pay less and are comfortable with a different, less expensive material, that’s an option as well. You have more flexibility and freedom through this process.
As you can see, there are several benefits that come with tolling manufacturing, especially compared to contract manufacturing. If you’d like to learn more about the process, we invite you to give CTI a call at 419-924-5566 or contact us directly. Let’s discuss what tolling manufacturing can do for you.
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