Toll Processing 101: What You Need To Know

Justin Klinger, Dec 2, 2019 1:16:02 PM

Worker in a toll processing facility

Many excellent companies are discovering the most cost-efficient way to produce their product is to outsource a specific portion of their production process to another excellent company; one that has specific resources in place — specialized equipment, dedicated facilities, and manpower … the toll processor.

Even more important, a toll processor has experience in processing many materials for a diverse base of companies. That know-how can help provide the client with process suggestions, challenges to watch for, and even specific formula advice to reach the exact physical and chemical composition needed.

Example of Toll Processing

This is a helpful big-picture view, but how does that relationship translate into an advantage in the marketplace? Let’s review a dozen ways (each just a brief overview) that toll processing helps companies thrive and provide value every day.

Top Ways Toll Processing is a Life-Saver

Capital Investment Savings — Everyone loves to save money. Using toll processing, a company doesn’t have to invest in specialized equipment, extra labor, or production space; the toll processor has all of these resources ready to go.

Raw Material Handling — Depending on the process, a toll processor can buy and store raw materials, simplifying everything and saving money on transportation. Or, the toll processor can receive materials from the originating source to control the quality of the raw materials.

Customization — Many toll processors offer customized formats and packaging possibilities. When a company can’t invest the time and money to produce a specific product, customization is welcome option.

Logistics — High-end toll processors coordinate onsite storage, offsite warehousing, and even delivery to the product’s final destination. This removes the stress of storage availability and delivery coordination.

Flat Fee — Often a toll processor’s cost of labor and packaging is a flat fee. So, no matter how much is produced, the cost doesn’t change. This toll processing flat fee is another money-saving function for companies.

Increased Efficiency — Production costs and manufacturing challenges are removed from the company’s plate as the toll processor uses its own specialized equipment and employees. Subcontracting work is what they do.

Space Savings — Production facilities and empty storage spaces are expensive to maintain. What are the results when a company simply ships raw goods to a toll processor? Fewer headaches and saved money on large space rental.

Reduced Labor Costs — Hiring facility workers is costly and difficult during this labor shortage. Companies instead outsource work to a toll processor and spend that time focusing on other business needs.

Consistent Quality — Regardless of the toll processing service (size reduction, contract drying, blending, extraction, extrusion, etc.), the company can control the ingredients used. They purchase ingredients cost-effectively while maintaining watch on ingredient quality.

Production Expediency — Companies that use chemicals in their production process aren’t usually tooled for in-house chemical production. However, contract toll processing companies are, so they can handle strict production schedules and larger volumes.

Flexibility — Contract and toll processors give companies more flexibility during any stage of production. For example, within product development, a company can contract a toll processor to begin production while that company continues to build its own facility.

On-Demand Capabilities — Using a third-party for specific services allows companies to avoid investing in additional equipment, facilities, and employees. So, they receive services when they need them while saving time and money. The on-demand service model is ideal for seasonal projects and product testing.

Selecting a Custom Toll Processing Company

Like selecting a vacation spot, the cheapest option may not automatically be the best. Nor is the closest, necessarily. And selecting on reputation alone isn’t smart.

Remember, the toll processor you choose could well be the final guardian between your product and your customer; they’re really your new partner in quality. It’s vital that you review quality assurance and quality control procedures. Process problem potential — contamination, off-spec material, overweight, underweight, late shipments — is already high, whether performed by an outsourced vendor or in-house. The ability to trace product from arrival time through departure time is really standard procedure for any worthy toll processor.

Take the time to visit a toll processing plant. You’ll see the environment your product will be exposed to and how it will be processed. If a feasibility test is required, have ready specifications on particle size, average size, moisture content, bulk density, and temperature limitations to speed up the testing procedure.

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 on your side.

You’re good at what you do. But, you’re not good at everything. With some diligent research, you can find the outsource partner that gives you an edge.

So now that you’re clear on the advantages of working with a toll processor, you’ll likely benefit from an explanation of the ways toll manufacturing and contract manufacturing differ. While both fall under the outsourcing umbrella, the differences are important. Understand how a toll processor delivers specialized material expertise along with the quality assurance and process controls you need, from start to finish. Get our downloadable, sharable guide when you click the link below.

Toll Manufacturing vs Contract Manufacturing
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