8 Ways to Reduce Manufacturing Costs

By Dianne Britt | September 6th, 2019

From the moment your product leaves your plant, it faces a series of potential roadblocks on its path toward its ultimate destination in the vet’s clinic, a pet owner’s hand, or the spoonful of peanut butter that will help a dog take his pill. Each of those roadblocks can become a place to lose efficiency.

Manufacturers face myriad challenges in the animal health space when trying to get their product to customers as efficiently as possible, from costly and heavily regulated shipping and transportation logistics to quality control and forecasting in a rapidly evolving market.

Here are eight ways to reduce manufacturing costs and improve efficiency with the help of a master distributor.

1. Big Picture Expertise

Distributing your animal health products efficiently and cost-effectively requires expertise in the market and an intimate understanding of your product. That’s what the right partnership will provide.

Especially for smaller companies or startups in animal health, distribution may not be a core competency. Your expertise is in product development, but you may be stuck dividing your time juggling relationships with distributors and navigating the murky waters of ever-shifting regulations.

A master distributor’s job is to be an expert in your field, your products, and your business. They manage all contacts and relationships with smaller distributors for you, handle marketing initiatives, and maintain regulatory compliance, keeping manufacturing costs down, and allowing the minds behind the products (you) to focus on what you do best.

2. Transportation and Airspace

Shipping controlled substances and medical devices can be a costly venture, especially when handling the logistics and regulations specific to each state. One solution is to use your master distributor as your distribution hub; ship to them, at one centralized location, and they’ll disperse your product where it needs to go.

Because they’ll be buying your product in bulk, you’ll be able to minimize airspace within the truck, container, or other vessel, creating a far more efficient journey from you to distribution.

3. Shipping and Logistics

Once your product is housed with your master distributor, it’s their job to get it to hundreds of locations across the country. The benefits of this partnership are huge when it comes to manufacturing cost savings. Your master distributor will be able to negotiate better shipping rates for the large orders they fill, consolidating your resources and shouldering that logistical burden.

4. Licensing and Regulations

Shipping to one location also means you only have to worry about the licensure for one state. The animal health market faces a diverse set of guidelines determined state by state, each of which requires a separate license to ship healthcare products — and those licenses in themselves can be costly: Some states charge as much as $750 annually for the required license.

You’ll need dedicated resources to take charge of understanding and adhering to these constantly changing regulations and maintaining the necessary licenses to ship your products across the country. That’s unless you have a master distributor, who maintains all the required licensing they need to sell your products for you (a great way to reduce manufacturing costs overall).

5. Collateral and Contacts

Training distributors on your product can cost you in time and resources, especially if you’re managing a large number of accounts — and each of your distributors are selling hundreds of different products.

Because your master distributor acts as an integrated partner to sell your product for you, they can also manage all the training, marketing collateral, and samples needed to turn distributors into experts on selling your product. And they’ll have a large pool of distributors to bring your product to.

You need contacts across the supply chain. Find a master distributor with a database of connections to create efficiencies, from distributors and vets to brokers who take care of freight and border protection when importing products, if you’re manufacturing outside the U.S.

6. Product Assurance

Reverse logistics can be one of the biggest drains on time and resources for manufacturers. Your product needs to get to the right place at the right time. Shipping sensitive materials back and forth across the country is not effective and can be a huge pain point.

Having a watchful eye in charge of moving your product from point to point eliminates this resource sinkhole that can often eat up labor, time, and expenses.

7. Credit Risk

Damaged products, product returns, and recalls are risks most pharmaceutical companies assume. If your master distributor is managing all of these logistics, they should be managing your credit risk too. That means you’re not on the line if something does go wrong, which can be a point of concern, especially for smaller companies and startups that are just emerging in animal health.

8. Forecasting

The final piece of the puzzle in getting your product to its end-user is to start all over again. How do you ensure longevity, and how do you make sure every production cycle is happening more efficiently?

Understanding fluctuations in the market and responding wisely is paramount to becoming an effective player in animal health. As your expert consultant, your master distributor should be able to predict these changes and help you adjust your production strategy.

Master distributors provide consolidated forecasting of the online market, as well as a dedicated purchasing team that helps manufacturers and distributors stay informed and optimize strategies. With shipments routing all over the world and decisions often being made with six months of lead time, having a partner provide advanced forecasting could be the difference between you and a competitor with less market insight.

Contact EPiQ Animal Health to discover more ways to reduce manufacturing costs and to learn how a master-distributor partnership could positively impact your manufacturing costs and operations.

About the Author

Dianne Britt is manager of financial planning and analysis at EPiQ Animal Health. In addition to reporting, forecasting, and budgeting, she oversees the margin reimbursement process for EPiQ’s partner manufacturers. Dianne spent 17 years at FedEx in pricing and finance roles, in addition to experience at NCR and in the insurance industry. Her breadth of experience in finance and logistics has made her a perfect fit for EPiQ. Dianne has an MBA and Bachelor of Science from The Ohio State University and enjoys traveling, hiking, cooking, and cheering for the Buckeyes.
Dianne Britt
Manager of Financial Planning and Analysis

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