Many of our followers are at the stage that they want to outsource skincare manufacturing of their formulations. Outsourcing the manufacturing of your skincare products can feel like a daunting step for you and your business, but as long as you make sure you have a legal agreement in place with your manufacturer you should be adequately protected. Unfortunately we have seen many entrepreneurs enter into such skincare manufacturing arrangements without any legal agreement in place, so we encourage you to think through the steps in our checklist below.
We hosted a detailed discussion on outsourcing skincare manufacturing with some of our community members in our Skincare Entrepreneur Mastermind networking group on Facebook a while ago and decided to share some of these points with you in our latest blog post. We’ve summarised the 11 points you should consider before you outsource the manufacturing of your skincare products.
1. Create and sign legally binding contracts
Many skincare entrepreneurs only consider having a confidentiality agreement or non-disclosure agreement (NDA) but you must sign a performance-related contract with your manufacturer.
We recommend that if you’re going to work with a manufacturer, you speak to a commercial lawyer with experience of working with manufacturers. That lawyer needs to be located in the jurisdiction where the contract is based.
It will cost money to hire a lawyer, but you should view this as an essential investment for your business. Imagine how much money you could lose if something goes wrong and you have no way of placing accountability or liability with your manufacturer?
2. Protect your Intellectual Property
Your Intellectual Property (IP) is yours and you need to make sure that any legal agreements you sign protect it at all times.
If the manufacturer makes any tweaks to your formulation, is it still yours? If you decide to terminate your contract with this manufacturer and work with a different one, can you still make the same formula? Make sure that your legal agreements protect your IP and think through all eventualities before you sign a contract.Your Intellectual Property is yours - protect it at all times. Click To Tweet
3. Discuss Good Manufacturing Practice
You should be familiar with GMP to the point that you know which standards you want your manufacturer to meet (and if you’re not, enrol for our Advanced Diploma in Organic Cosmetic Science when we give you detailed advanced checklists!). Here in the EU, it is mandatory that you comply with ISO22716:2007 when you manufacture cosmetics.
Talk to your manufacturer about GMP and make sure you are totally happy and in agreement with their interpretation of Good Manufacturing Practice. Ask to tour their facilities and get a feel for how they work. Go into detail. Ask very specific questions. Make sure you have a detailed checklist with you that covers all the relevant points. You have to be totally happy with the way your manufacturer is going to make your product and make sure it is in compliance with the law.
4. Agree where your manufacturer will source ingredients
When you outsource your skincare manufacturing, you’ll need to agree where your manufacturer will source their ingredients. You may have certain ethical or sustainability requirements that go to the heart of your business – these are all points you must consider when you decide where your supplier will go shopping for your formulations.
Have an agreement in place that specifies what happens if you need to change suppliers. How will your manufacturer ensure consistency if they suddenly need to source their ingredients from another company or region? Will you receive a sample first to approve any changes? Make sure you specify what will happen for every change.
5. Create a formal brief
When you first start working with a manufacturer, you should put together a formal brief which lists what you expect them to make. If you haven’t yet finalised your formulations and you will be working with your manufacturer to create the finished formula, then you will also need to agree a brief which specifies which ingredients you want them to use, how you want your products to be preserved and which ingredients are banned.
The more detailed you are, the less chance there is of any confusion.
6. Agree on a benchmark sample
You and your manufacturer should be clear on how your product will look, smell, function and feel. You’ll need to make a benchmark sample in the final packaging that you intend to use. You will need to agree with your manufacturer that this is the sample they will aim to replicate each time.
In other words, before you outsource the manufacturing of your skincare products, you should agree on the texture, colour, viscosity and fragrance of your formulation. Imagine a situation where your manufacturer changes their supplier of shea butter and all of a sudden your product is of a much thicker viscosity and won’t pump out of your containers? You’ll need a benchmark sample to refer back to.Agree with your #skincare manufacturer how your product will look, smell and feel. Click To Tweet
7. Agree batch size and delivery times
You need to agree exactly on what your skincare manufacturing facility will deliver and when they will deliver it. Will you have regular batches manufactured or will be they be manufactured as and when you need them? If the latter, how much lead time and notice does your manufacturer require before they can deliver your batch to you? You have to be crystal clear on how long these lead times are because if you run out of stock and then have to wait 3 months before your next batch is delivered, you will negatively impact your business.
Also agree on the size of your batch. What is the Minimum Order Quantity of products manufactured by your facility? Keep in mind that the fewer units you produce, the more they will charge. Most facilities don’t go under 1000 units, so you will need to be prepared for a big capital outlay and you will need to be sure that you can sell them within a suitable timeframe (particularly as organic skincare formulations generally have a short shelf life).
8. Agree on batch codes
As you undoubtedly know, cosmetic labels can be tiny in size and we already have to deal with lengthy ingredients lists and cosmetic allergen declarations in certain countries. Nonetheless, you must squeeze a batch code somewhere onto your packaging as this is part of your manufacturing strategy and part of Good Manufacturing Practice.
You should leave space for your manufacturer to print a batch code onto your labels. Where and how will they do this? What will it look like? These are all points you must discuss upfront and agree with your manufacturer.
9. Agree on which standards must be met
Are your products going to be organically certified? Or are you going to meet Halal, vegan, gluten-free or paleo requirements, for instance? If your brand is going to be certified by any specific standards, then not only will your formulations have to meet their requirements, but so will the facilities where they are made.
You will need to discuss your certification needs with the skincare manufacturing facility you choose. It may even be a good idea to find a facility that is already certified to make organic products, or Halal products, or vegan products. That way they are already familiar with all the steps they must undertake and won’t have to do anything special for your brand.If you go for #organic certification, check the production facilities also meet standards. Click To Tweet
10. Determine which tests will be undertaken by the manufacturer
Regular cosmetic stability testing should be part of any formulator’s lab – and this includes your manufacturer. If you want to make sure that each batch of your products is stable then you need to agree such tests upfront with your manufacturer.
You must be specific about the types of tests you want undertaken (e.g. thermal stability, centrifuge, freeze/thaw stability, photostability, etc.) and then you must agree a testing schedule with your manufacturer. How often do you want these tests to run? Do you want them to keep any reference samples? Where and how should these samples be stored? Do you want to receive reports about their tests? These are all points you must consider when you’re agreeing a skincare manufacturing strategy.
We recommend that you go into any skincare manufacturing agreement understanding which tests will be required. Enrol for our Certificate in Cosmetic Stability Testing to learn which of 20 tests might be applicable to your formulations.
11. Think about how you will deal with returns or complaints that relate to the formulation
Now that you’re in business, you will undoubtedly at some point deal with returns, complaints and refunds. But what will you do if you have to undertake a product re-call because your manufacturer got something wrong? What if your formulation is growing microorganisms because your batch was accidentally contaminated?
We recently wrote a blog post about the re-call of 15,000 bottles of Liz Earle cleanser – imagine that happening to you if your manufacturer had inadvertently caused contamination in your batch. What would you do? Who would shoulder the financial liability of a batch that had to be re-called and destroyed? These are points you must consider as you put together your contract.
As you can see, there are many points you should consider before you outsource the manufacturing of your skincare products. Outsourcing isn’t for everyone – some formulators are keen to keep the integrity of their manufacturing process in-house. But if outsourcing is an approach you want to take then we recommend that you consider all of these points in detail. Once you have freed up this massive part of your business, you’ll then be able to focus on the marketing and sales of your brand.
Have you considered outsourcing the manufacturing of your skincare products? Which points concern you the most? Leave us a comment below!
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Lorraine Dallmeier is a Biologist, Chartered Environmentalist and the CEO of Formula Botanica, the award-winning online organic cosmetic science school. Read more about Lorraine and the Formula Botanica Team.