For any growing food company, the question will come up as to whether one should continue to manufacture its own products or opt for outsourcing instead. The business model is in itself very different between that of manufacturer and that of food marketer. But what is the impact on the product when choosing one model over another? And why did we decide to manufacture our own products unlike most of our competitors?
The pros and cons of outsourcing
Indeed, when entering the very competitive market of breakfast products, and more particularly cereals and granolas, having a good recipe does not always cut it. The challenge is also to obtain cost structures that will be sufficiently interesting in order to offer an attractive proposition to consumers. It should also be expected that several stakeholders will be involved (distributors, stores, brokers), and they must have the latitude to take their margin and carry out promotional actions. Naturally, one may think that making your own products would be the most obvious solution, but it requires significant investments and a constant upgrade of facilities.
The other solution is to outsource the production. This way, you can exclude the manufacturing management risks, but this solution also involves other issues and restrictions. So, outsourcing or manufacturing? Unlike many of our competitors, at Fourmi Bionique, we have chosen to offer artisanal products that we manufacture ourselves and have done so for the past 16 years.
Outsourcing is the simplest and quickest way to get into a market. In fact, there is no need to rent a factory, to obtain certifications for the plant, to buy the machines, to manage breakdowns, to hire and manage production employees, to find supply chains, to manage the quality of your product… All this is already set up and managed by the subcontractor who has all the expertise.
The time that is saved is therefore considerable and the money that is not invested in the production can be used to promote the product. It represents a real asset and the business model is greatly simplified.
Why not choosing outsourcing?
The GOOD choice…
Indeed, we have evaluated the possibility of outsourcing many times since the creation of the company. We even asked a baker to prepare our first batches back in 2003, which he refused, but he suggested instead that we come and produce the cereals ourselves in his establishment, which we did. The years passed, we continued to manufacture in the facilities of others until the day when we considered the possibility of settling in our own premises. At this stage, we explored potential subcontracting collaborations, however, we had to give up organic certification as well as the presence of nuts in our products (at the time, few companies had organic certification). We therefore chose to create our own factory in order to maintain our vision and our values, as well as our original recipes.
The DIFFICULT choice…
After a few years of manufacturing, we now know that this path is full of pitfalls and it is very difficult to make the operations profitable while still proposing a competitive price. With little experience in optimizing production operations and low-performing basic equipment, our company has had some difficult years. Despite our important sales growth, Fourmi Bionique was unprofitable.
Our production was artisanal and done in small batches. Quality issues must therefore also be constantly monitored: overcooked or undercooked products, rancid or non-compliant ingredients, etc. So we considered outsourcing once again as we were being challenged with higher volumes. This time, the compromise to be taken into account was to change suppliers so that the certifications of our supplies would be compatible with those of the subcontractors.
It was a major problem for us, considering that we had to give up some of the key ingredients that were used in our recipes for many years, what our customers would certainly detect (our chocolate, local honey, flower petals). In addition, the cooking would have been very industrial-looking and homogeneous, while the visual signature of our products is that of a pronounced color variation associated with our artisanal production, which translated into the oven-roasted taste of homemade granola. In short, it would simply not have been the Fourmi Bionique products!
Deciding to be THE best manufacturer
Afterwards, we decided to remain master of our own destiny and to become an excellent manufacturer of artisanal granolas. We have completely renovated our facilities, we have tightened our quality standards and achieved world-class certifications. We have optimized our production operations in order to offer the best product on the market, and at the best cost.
Today, our facilities are efficient, we offer superior quality products and we always respect our ingredients and recipes. Our progress has allowed us to understand the issues of outsourcing and gain better understanding of this solution which can also have great disadvantages:
– It does not allow to have a complex and personalized product. Recipes must be standardized at the risk of selling a product very similar to that of the competition;
– The control of cost structures is worse. Difficult to propose a good quality/price ratio, one does not control the manufacturing process and the subcontractor takes its margin first. Goodbye golden granolas with honey and hello to glucose or liquid cane syrup in the recipe;
– There is extreme dependence on the subcontractor. In case of problems (bankruptcy, bad quality…) we may need to start over or even close shop.
The result of all this? Standardized products for which quality/price ratio may be unsatisfactory.
At Fourmi Bionique, we are artisans of taste. We create our own recipes, often precursors in our niche. We control the supply, manufacture and marketing of our recipes up until they show up on store shelves. For a price that is more than affordable, we manufacture high value-added products, made with high quality artisanal chocolates, dried fruit (and not freeze-dried) without sulphites, various Quebec organic cereals (barley, rye, oats, spelt), top quality Quebec honey… All this to offer products that feed the body, but also the soul.
In addition, to ensure the best quality, we have worked to obtain many certifications: Ecocert, Kosher, Whole grain, Gluten-free, GMO-free, SQF, HACCP, Aliments du Quebec…
This requires many sacrifices, patience and a lot of love. The result? A unique quality product at the best value, which can be imitated, but never duplicated 😊