Preventing Food OEM Failures: Common Failure Cases and Countermeasures for Success

You want to make your own brand's food.

The number of companies thinking this way is increasing. Entry from other industries — retail, food service, startups — is also becoming active, and the food OEM market continues to expand. On the other hand, however, failure cases such as "the product didn't turn out as expected," "costs ran higher than anticipated," and "complaints arose after sales" are endless.

Food OEM is an attractive option that lets you deploy your own brand products without owning manufacturing facilities. Yet cases where a project falls through due to insufficient preparation or a naive understanding are not few. What divides success and failure lies in prior information-gathering and appropriate countermeasures.

This article clearly explains the representative failures companies tend to fall into in food OEM, along with their causes and countermeasures to prevent them. We hope it serves as a practical guide for raising the success rate for companies now considering OEM.

Lessons learned from common failure cases

Choosing an OEM manufacturer judging on price alone

This is the failure that companies tackling food OEM for the first time most tend to fall into.

Taking quotations from several companies and deciding on the manufacturer that presented the lowest price. At first glance it seems reasonable, but this becomes a major pitfall. Behind a low price may hide inadequacies in the quality-control system, low responsiveness, and the risk of delivery delays.

In fact, there are cases where, as a result of choosing on price, a quality defect was discovered after manufacturing and the entire quantity had to be discarded. As a result of trying to keep initial costs down, you end up suffering a larger loss instead. Responsiveness, whether small-lot handling is possible, a quality-control system such as GMP certification, past track record, and proposal ability — it is important to evaluate these comprehensively.

Proceeding to manufacturing with a vague product design

The attitude of "let's just make it for now" is dangerous.

If you start manufacturing while the target customer, selling price, sales channel, and product concept are unclear, you end up with a product that the market won't accept once completed. In many cases, the direction isn't set at the prototype stage, sample production has to be redone many times, and time and cost are wasted.

Clarifying, at the product-planning stage, to whom, what, and how you will provide is the first step to success. Even in meetings with the OEM manufacturer, having a concrete concept sheet lets development proceed smoothly.

Disregarding delivery times and having the sales plan collapse

Food manufacturing takes more time than imagined. Raw-material procurement, prototyping, component analysis, manufacturing, packaging, inspection. If you decide the sales start date first without considering the period needed for each process, you fall into the situation of not making the delivery time.

Especially for seasonal or limited-time products, missing the sales timing becomes a major opportunity loss. It is essential to set the manufacturing schedule with room to spare and to coordinate closely with the OEM manufacturer.

Concrete countermeasures for success

How to choose a trustworthy OEM manufacturer

Choosing a good partner is the key to success.

The first thing to check is whether a quality-control system such as GMP certification is in place. Because food manufacturing requires strict hygiene management, obtaining certification is an indicator of reliability. Next, whether small-lot handling is possible. When using OEM for the first time, being able to start from small-volume production to keep risk down is called for.

Furthermore, the speed of response to inquiries and consultations cannot be overlooked. A manufacturer that responds promptly and courteously can be entrusted with peace of mind even at the manufacturing stage. Also check the past manufacturing track record and reputation, and discern whether they have a strength in the product category you seek.

Proposal ability is also an important element. A manufacturer that can make proposals considering not only undertaking manufacturing but also marketability and sales strategy becomes a true partner.

Elements to clarify at the product-planning stage

A successful product has a clear concept.

A detailed profile of the target customer, the issue to solve or value to provide, the product's main features and components, the price range and sales channels, and the differentiation points from competing products. Create a concept sheet that documents these concretely. With this sheet, development can proceed efficiently without the direction wavering in meetings with the OEM manufacturer.

Drawing up a sales plan in parallel is also called for. Where and how will you sell? By planning the sales location and promotion media — EC, stores, social media, and so on — from the planning stage, you can smoothly bring the product to market once it is completed.

Points of cost management and securing profit

Grasping the overall picture of costs is essential.

The costs involved in OEM span many areas — raw-material cost, manufacturing cost, packaging-material cost, design cost, prototyping cost, and more. When using functional ingredients, license fees also arise. Clarifying these costs in advance and balancing them against the selling price is called for.

Small-lot production tends to have a higher unit price, but it has the merit of keeping inventory risk down. A strategy of running a test sale with small-volume production the first time and increasing production while watching the market's reaction is effective. For containers and packaging too, using ready-made ones the first time and shifting to original containers after a track record emerges can keep costs down.

Efficient OEM-manufacturer searching using matching sites

Conventionally, the ways to find an OEM manufacturer were limited. Attending trade shows, receiving introductions within the industry, searching individually online. All take time and effort, and finding the manufacturer best suited to your company was not easy.

But a new option — the food OEM matching site — has appeared.

「Food OEM Directory" allows companies looking for OEM to compare and evaluate processing manufacturers that match their conditions. Because you can narrow down by concrete search conditions such as "small lot," "powder processing," "domestic-ingredient handling," and "tea-bag filling," you can search for manufacturers efficiently.

The inquiries that reach listed companies are often from prospective customers already considering an order, so they have the characteristic of easily leading to high-probability business talks. Because you can list your own information 24 hours a day and acquire leads across regions and industries, it is more efficient than trade shows or sales visits.

Listed information also functions as sales material. By clearly stating the minimum lot, scope of handling, processing equipment, areas of strength, and so on, you can objectively convey your company's strengths. The clearer "what kind of manufacturer can do what," the easier it is to gain the trust of ordering companies and the higher the quality of inquiries.

Matching sites also have value as a mid-to-long-term SEO asset. Pages within the site tend to rank highly in search engines, and information reaches segments that your own site alone cannot. Used together with trade shows and business meetings, it can level out lead acquisition.

However, it is also true that vague expressions like "we can do anything" make results hard to come by. It is effective to concretely state the processing you can handle, lot quantity, delivery time, and use, and to attach photos and examples of your track record. The speed of the initial response also greatly affects the closing rate.

A final checklist to prevent failure

To succeed at food OEM, let's do a final check of the following points.

Check items when selecting an OEM manufacturer

Whether a quality-control system such as GMP certification is in place

Whether small-lot handling is possible

Whether responses to inquiries are prompt and courteous

Whether the past manufacturing track record is ample

Whether they can make proposals considering marketability and sales strategy

Check items at product planning

Whether the target customer is clearly defined

Whether the issue to solve or value to provide is concrete

Whether the product's features and components are clear

Whether the price range and sales channels are decided

Whether the differentiation points from competing products are clear

Check items before starting manufacturing

Whether you grasp the overall picture of costs

Whether the manufacturing schedule has room to spare

Whether the sales plan is concretely drawn up

Whether you are satisfied with the prototype's quality

Whether the labeling and packaging comply with laws and regulations

By clearing these check items one by one, you can greatly reduce the risk of failure.

Summary: The secret to successful food OEM

Food OEM is an attractive option that lets you deploy your own brand products without owning manufacturing facilities. However, cases of failure due to insufficient preparation or a naive understanding are not few.

The keys to success are choosing a trustworthy OEM manufacturer, clarifying the product concept, and appropriately managing cost and delivery time. Rather than judging on price alone, evaluate the quality-control system, responsiveness, and proposal ability comprehensively.

Using a matching site lets you efficiently find the manufacturer best suited to your company. By using it as a third customer-acquisition route in addition to trade shows and introductions, the possibility of encountering high-probability projects rises.

To succeed at food OEM, let's start preparing today. A clear concept, appropriate partner selection, and a meticulous plan. These lead your brand to success.

If you are thinking of making your own brand's food, first please start with encountering a trustworthy OEM manufacturer.

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