Unlocking Toll Processing: Key Benefits and How to Choose the Right Partner
Jen Lepore, Aug 30, 2024 4:00:00 PM
Many trusted companies are discovering that the most cost-effective way to manufacture their products is through toll processing, which involves outsourcing part of their materials processing to a specialized partner. So, what is toll processing? Companies look for a toll processor with essential resources—specialized equipment, dedicated facilities, and skilled manpower—to meet their needs.
This helpful big-picture view offers a basic understanding, but how exactly does partnering with a toll processor translate into market advantages? The true value lies in the toll manufacturer’s extensive experience, gained from working with a broad spectrum of materials and industries. This expertise brings essential process knowledge, insights into challenges, and even formulation guidance to achieve the precise physical and chemical properties required. Let's dive into some key ways that toll processing helps companies thrive and consistently deliver value.
What is Toll Processing?
When a manufacturer is evaluating potential contract manufacturing and/or toll processing partners, it’s important to understand the differences. Toll processing involves outsourcing specific manufacturing tasks to a third party. This can include producing entire products or ingredients, and performing key processes such as milling, blending, liquid bottling, and final product packaging.
How does toll processing fit into a manufacturer’s production process? Simply put, the manufacturer supplies and owns the raw materials, while the toll manufacturer is paid to handle the processing according to specific requirements. Essentially, toll processing involves performing various processing steps on materials provided by your company, for a fee.
This differs from other contract manufacturer arrangements, in which the contract manufacturer may source and purchase materials, then manufacture or process to specification. This page covers the differences in depth.
Top Benefits of Toll Processing For Boosting Your Business
Savings on Space & Capital— Toll processing saves money by eliminating the need for specialized equipment, extra labor, and production lines, which the processor provides. It also cuts costs on production facilities and storage by handling raw goods directly.
Supply Chain Management— A toll processor can streamline logistics by either purchasing and storing raw materials to cut transportation costs or receiving them directly from the source for better quality control and efficiency. A full-service processor handles onsite storage, offsite warehousing, and delivery, saving time and costs while easing stress.
Customization — Many toll processors offer customized formats, product formulation, and packaging possibilities. When a company cannot invest the time and resources to produce a specific product, customization offers a valuable alternative.
Flat Fee — Often, a toll processor charges a flat fee for labor and packaging. This means that even if a project’s yield exceeds expectations, the cost remains unchanged. This flat fee structure provides additional cost savings for companies.
Enhanced Efficiency — Production costs and manufacturing challenges are taken off the contracting company’s plate as the toll processor uses its own specialized equipment and employees. Handling outsourced work is their specialty, and efficiency is inherently built into their operations.
Expedited Production — Companies using chemicals might lack the tools, certifications, or permits for in-house production. Contract chemical toll manufacturers have these capabilities, handling stringent schedules and large volumes. Outsourcing to them allows companies to rely on experts for complete processing.
Flexible On-Demand Capabilities — Contract manufacturing and toll processing offer flexibility at any production stage. Companies can use toll processors for full-scale production while building their own facility, avoiding extra investment in equipment and staff. This on-demand model saves time and money, ideal for seasonal projects and product testing.
Cost Efficiency — Labor shortages make hiring skilled workers costly and tough. Outsourcing to a toll processor offers access to experts and operators, allowing companies to focus on core needs. It also saves money by avoiding investments in equipment, labor, and production lines, with processors often acquiring the necessary gear.
Quality and Compliance — Companies needing specialized capabilities, like cGMP-certified processing for food and pharmaceuticals, can rely on toll processors to ensure quality standards and save time and money. Regardless of the service—size reduction, contract drying, extrusion, extraction, blending, or liquid bottling—the company retains control over ingredient quality and purchasing power.
Choosing the Right toll processing partner
Choosing a toll processing partner is like buying a car—price alone doesn’t guarantee quality, nor does proximity ensure the best fit. Relying only on reviews can miss key details that are essential to making the right choice.
Remember, the toll processor you select is a crucial link between your product and your customer, acting as your partner in quality. It's essential to assess their toll manufacturing quality assurance and quality control procedures. Whether performed by an outsourced vendor or in-house, issues such as contamination, off-spec materials, or delays can arise. A reputable toll processor should have robust procedures to trace your product from arrival to departure.
Take the time to visit a toll processing plant. You’ll observe the environment and processing methods for your product. If a feasibility test is needed, have specifications on particle size, moisture content, bulk density, and temperature ready to expedite the process.
All testing and inspection aside, will this toll processor reduce your risk, enhance your position against your competition, boost your bottom line, and lessen headaches? That’s the kind of toll processor you want as your partner.
You excel in your field, but you can't do everything. With thorough research, you can find an outsourcing partner that gives you a competitive advantage.
Now that you understand the benefits of working with a toll processor, it’s helpful to explore the differences between toll manufacturing and contract manufacturing. Although both are forms of outsourcing, the distinctions are significant.
Discover how a toll processor provides specialized material expertise and ensures quality and process control from start to finish. Download our guide, "What Are the Differences Between Toll Manufacturing and Contract Manufacturing?" by clicking the link below.