When looking for an Australian supplement manufacturer, one of the key factors to consider is the manufacturer's minimum order quantity (MOQ). Even if a minimum order quantity is not mentioned on a website or brochure, it's safe to assume that the manufacturer will have an MOQ in place for each type of product or service offered.
What does minimum order quantity (MOQ) mean?
Minimum order quantity refers to the lowest amount of product a supplement manufacturer will create for a single purchase order.
Creating a custom supplement product has many moving parts — namely sourcing required ingredients, research and development, and the manufacturing process itself. Each of these phases of manufacturing comes with individual operational costs, which all add up to the total costs involved in creating a supplement product.
Supplement manufacturers establish a minimum order quantity to ensure that the cost of each production order is kept to a profitable margin.
How minimum order quantity works
Minimum order quantity works on the concept of economies of scale, where the cost per unit can be lowered by producing in bulk. Here's how it works:
Let's assume a business wants to place an order of 100,000 tablets. The supplement manufacturer then secures the necessary amount of ingredients and completes a production run with a total cost of $50,000, giving each tablet a production cost of $0.50c. If the order amount was increased to 250,000 tablets, the supplement manufacturer could secure the ingredients in bulk at a lower price, coming to a total cost of $75,000. This actually lowers the production cost of each tablet to $0.30c.
Cost efficiency can then be passed on to the business that placed the order. As a result, the minimum order quantity ensures that the production run is profitable for the supplement manufacturer and ultimately incurs lower costs for businesses.
Benefits of low minimum order quantity
Supplement manufacturers in Australia have varying minimum order quantities based on their operational capacity and costs. In general, businesses will benefit more from supplement manufacturers that offer a low MOQ.
Benefits of working with a low MOQ supplement manufacturer include:
Increased flexibility
With a low minimum order quantity, businesses have the flexibility to experiment with different types of formulas and product variations. This can be especially useful in creating an initial line of products that can then be further refined based on market research.
Lower upfront cost
Low-MOQ supplement manufacturers are better suited for businesses that have limited financial resources. Smaller orders translate to a lower initial investment for businesses.
Shorter lead time
Smaller quantities require less production time, allowing businesses to quickly push the completed product to market.
Reduced inventory risk
Unlike high MOQ orders where businesses risk ending up with excess that cannot be sold, low MOQ allows businesses to manage and store smaller quantities of stock.
When working with a low MOQ supplement manufacturer, it's important to remember that there is no requirement to stick to the minimum amount. In fact, many businesses choose to increase the production order quantity significantly once the product has been refined and is performing in the market.
Choosing the right supplement manufacturer based on MOQ
Businesses looking to work with a supplement manufacturer should remember that MOQ is often an indication of the supplement manufacturer's capabilities. A supplement manufacturer with a low MOQ will often have more cost-efficient production processes, allowing them to pass on potential cost savings to clients.
The easiest way to find out a supplement manufacturer's MOQ is to request a quote. Gathering multiple quotes from a range of supplement manufacturers will make it easier to compare what each offers.
Apart from having a low MOQ, the supplement manufacturer should also have the necessary certifications, such as GMP-certified production facilities, TGA-approved laboratories, and a licence to manufacture lower-risk (AUST L) and higher-risk (AUST R) medicines. These requirements are essential for producing a compliant product that can be sold on the Australian market.
As a leading supplement manufacturer in Australia, Lipa Pharmaceuticals offers minimum order quantities in validated batch sizes of 300kg, 500kg and 700kg. The 500kg blend is the average MOQ of businesses that we work with, which is equal to 500,000 1g capsules/tablets or 8666 units of 60 capsules/tablets. For liquid supplements, we have a minimum order quantity of 750L.
Our approach to supplement manufacturing works on the basis of forming long-standing relationships with our clients. We typically work with businesses to manufacture at least four batches per product per year. Looking for a new supplement manufacturer? Get in touch with the team at Lipa Pharmaceuticals to learn more about our production process.