For small companies and entrepreneurs, contract manufacturing and packaging may help commercialize a product even if they lack manufacturing resources. For large food processors, contract manufacturing is a cost-effective way to manufacture products in small lots for test marketing, seasonal sales or special promotions — without investing in production cells to handle these specialty runs. Outsourcing frees the processor to focus on its strength as a high-volume manufacturer.
In addition, using a contract packager, or copacker, gives large processors a way to present the same basic product in many packaging configurations. Working with a copacker, the food company can efficiently package the same product in sizes and assortments tailored to a variety of customer segments.
NineSigma acts as kind of a sophisticated matchmaker with a network of more than 1.7 million entities that include industrial associations, inventor associations and food institutes, just to name a few categories.
“We start with a statement or request for proposal (RFP), which is distributed to members. Each RFP constitutes a unique search for those entities in the database, anywhere in the world, including global industrial companies, university or national labs, or other entities in the science and technology ecosystem. The purpose of this first RFP is to define a subnetwork of 1,000 to 10,000 entities that can provide the client the needed expertise and capability,” explains Stiros.
The openness of the process does not mean that the client’s core idea is exposed. Competitive information still remains private. NineSigma deals with the need for privacy by scrubbing the client’s problem and translating it into a nonconfidential statement of technology.
Stiros provides an interesting and instructive example of how technology links can work. A client needed the ability to microwave food evenly, with a precision not generally seen in food applications. So without divulging the details of the product that required it, the idea was scrubbed to a technological problem. The responder was a company that had solved the problem of using microwave capability to thaw frozen blood for battlefield applications. Here imprecision was not tolerable.
Stiros’ entrance to the company was equally interesting. It began when he was a customer of NineSigma. A chemical engineer, Stiros was involved in a challenging chemical engineering problem: how to make cotton shirts resistant to wrinkles. No one had developed a solution to this problem, and out of frustration, Stiros hired NineSigma. The need was scrubbed and presented as a surface phenomena problem. NineSigma connected Stiros with a university professor who had solved a similar surface problem on semiconductor wafers. Who would have imagined a relationship between the semiconductor industry and wrinkled shirts?
And so it was a little like the story of Victor Kiam who liked Remington shavers so much he bought the company. Stiros became NineSigma’s CEO.
Making use of the byproducts
An example of product development that arose from this open innovation model goes by the name of Vinifera for Life, a flour additive made with grape skins and seeds. Rich in natural antioxidants, notably the resveratrol common to wine, the pomace is also a source of essential fatty acids omega-3 and omega-6, along with iron and fiber. The dried, ground product finds creative applications in anything from breads to pastas to smoothies.
The flour product was the brainchild of Chef Mark Walpole, who’s now president of Vinifera for Life Canada. “The Guelph Food Technology Centre (GFTC) was instrumental in Vinifera for Life’s development,” says John Michaelides, director of research and technology at GFTC in Guelph, Ontario. “GFTC created the process needed for this unique product. It’s produced from the by-products of the wine industry and can be used in upscale baked goods such as artisan breads. The end products can be marketed based on the variety of the grapes that the skins come from. Products like Cabernet Sauvignon or Ice Wine breads are soon to arrive in upscale shelves,” says Michaelides.
“Bringing an idea to the market is an exciting, complex and often risky process, requiring additional expertise, space, time, and equipment,” he continues. “Whether you are an entrepreneur or an established manufacturer of food products, the process of developing and successfully marketing new food products needs to be carefully considered. Outsourcing all or a portion of the process required for product development can help manage the extra resources needed to bring a new product to store shelves.”
Michaelides defines the considerations critical to both product development and the establishment of a need for the new product:
- Continuous supply and availability of the ingredients: Many ingredients may be seasonally available on a commercial basis, for instance, fresh fruits and vegetables. In that case, production in a short season must supply customers for the whole year. Good examples of seasonal limitations are condiments or pickles.
- Cost of the ingredients: How will they affect the competitiveness of the product in the market?
- Justification of the product: Is the product so superior that it will justify the increased cost, and can that cost be recovered by the selling price? Does the product fit in an upscale market?
- Production: Is the process of production compatible with the current equipment in the facility, or is the additional equipment or new technology needed affordable?
Scaling up: Once a lab-scale prototype is produced, scale-up using pilot plant equipment if possible must be done before plant or co-packer trials. Adjustments to formulation and process can be done at this stage, saving possibly thousands of dollars for plant trials.
- Co-packing: Will a co-packer be used? If so, formula identity protection must be considered.
- Regulatory restraints: Are there any regulatory constrains in getting the product in the market (both domestic and export)?
- Meeting customer demand: If the product is mainstream, can it supply a large customer’s demand given present processing equipment and facility?
- Shelf life: What is the product’s shelf life?
- Ingredient safety: When manufacturing new ingredients, is this ingredient a “novel ingredient,” as defined by Health Canada? If so, its safety and efficacy must be determined.
“If your product appears viable, you need to start thinking about what you will need to create the product. During your evaluation, be proactive. Consider the [above] factors and then establish whether you have the resources to address that particular issue or whether additional resources will be needed. This exercise will help you determine where in the process you will need to partner with an outside organization for assistance,” says Michaelides.
“Outsourcing is not only helpful when managing your resources, but can also bring new thinking to your project,” he adds. “Applying technologies or knowledge from other categories can create new efficiencies and novel products.” It can also bring to light possible pitfalls in the process and ultimately save your organization money.