What To Consider When Choosing A White-Labeling Partner

This panel consisted of Jessica Arent moderating, Brian Lytle CEO of Brian Lytle Consulting, Matthew Werner Business Development Manager at Kaizen Global Partners, and Jim Bostic CEO of Agronomics USA and Rocco Iannapollo with Cannabis Kitchen Supplies.

What is White-Labeling?

White-labeling or private labeling is when a product removes their labeling and your company’s label on instead. You are essentially rebranding a product as your own. It is agreed upon by both parties that you are white-labeling their product. Accordingly it is imperative need to have a concrete relationship with your white-labeling partner.

The importance of maintaining a strong level of ethical and moral values throughout the supply chain of any product you are putting your brand on is essential in this blossoming industry.

Issues such as doctored CofAs (Certificate of Analysis) and transparency through the process of sourcing. Having documentation and traceability on every ingredient were some of the main points that the panel focused.

Doctored Documents

CofA’s are a document provided by the manufacturer that establishes the materials and components supplied. Then ensuring they meet the pre-determined requirements for the product. CofA’s are only one of the important documents you can reference to have peace of mind and proof of authentic and safe ingredients.

Other documents such as SDS (Safety Data Sheet), API’s or documentation from ASTM or other independent testing facilities can be used to legitimize your product.

However, these documents can easily be altered. In the early days, of this industry, these doctored documents created a distrust in the industry. While also adding to the stigma connected to cannabis. To avoid this for the future safeguard these documents and continually certify that they have accurate data. Or risk the consequences of incorrect or modified components with your brand name on the label.

Generally speaking always check for fuzzy sections or colors fringing on hard edges or signs of pixilation are always good practice to check for. While also having a solid relationship with all aspects of your suppliers provides you the ability to verify the data on a CofA or other document at any time.

Transparency Through The Supply Chain

Every time components or ingredients change hands you need visibility about how that impacts your product. As your merchandise moves along your supply chain not knowing exactly what is going into the final merchandise can change what you are claiming on your white label. With solid traceability and documentation of every ingredient you can easily avoid unexpected contamination or other issues later on.

Remember your customers greatly appreciate your transparency as well. “Consumers are may be willing to pay 2 to 10% more for products from companies that provide greater supply chain transparency.” (Harvard Business Review). Having that transparency can not only aid your quality of output but increase your sales and customer base as people trust your product more.

Supply chain transparency is still a relatively new topic of discussion but with cannabis being such an adolescent industry. Entering the market with a strong stigma has its faults. Providing documentation can aid in your new customers trust in your product and continued business.

Henceforth you should always be aiming for the innovator stage as shown above. Where you can share information about your raw material suppliers and trace individual transactions.

If you would like to read more about Supply Chain Transparency click here.

MOQ’s

MOQ’s are the minimum amount of a material that can be ordered from a supplier. A MOQ’s can be beneficial for the supplier for accurate and efficient inventory …….. However this can really dissuade new brands entering the market that can’t afford a large MOQ or does not require that much of a material. Low MOQ’s also allow suppliers to have more adjustable shipments of specific orders. Therefore effectively matching your customers demand.

Extensive MOQ’s can’t be the standard anymore as we continue to see new companies and brands enter the market. When choosing a white labeling partner having a company with low MOQ’s. This can allow you and your brand to be flexible and ease into the market meeting what the customer is wanting.

More on the advantages and disadvantages of different level MOQ’s here.

Valuable Relationships

Looking for additional “value add-ins” from your manufacturer or white label partner can elevate your brand immensely. Continuing to develop brand awareness through your connections along the supply chain is always a plus.

If a manufacturer has a solid reputation for their high quality ingredients share that! Work with each other on all levels of raw material to product. Specializing in one area can provide you with a solid niche market but might also isolate yourself from future customers and partnerships.

As a result a balance between consistently sourcing from one company and maintaining exclusive relationships with various different sources can create a perfect formula for surviving any type of market. Having one source that you have an excellent relationship with can have its advantages Yet at the same time can leave you scrambling for products if you have only one supplier.

Keeping relationships with other sources can ensure supply to meet demand even during unstable times such as a pandemic or shortage of raw materials. Rocco Iannapollo used the example of gloves during the Covid-19 pandemic. At its peak the pandemic had a constant need for PPE. Having multiple different suppliers kept some businesses alive while others suffered in such a volatile market.

Just In Time (JIT)

Sourcing lead times can also present challenges to business owners. Many businesses got too comfortable with JIT delivery and had to spend a great deal of effort patching critical failure points in their supply chains. Especially during the pandemic related interruptions.

Business owners should communicate clearly as to “when” inputs should be delivered. Furthermore, having communication protocols around solving for disruptions in the supply chain can mitigate future dilemmas. Mature relationships will have documented service level agreements and expectations otherwise called service-level agreements (SLAs). So that both entities know what to expect from one another.

Conclusion

Overall create your brand with the goal of quality as one of your non-negotiables.

Ensuring high quality products from multiple sources can build immense trust with your customers. While also preserving a solid relationship with different labs establishes consistent and accurate data throughout your entire supply chain every time.

Thank you to all the panelists for such an amazing amount of information and helpful guidance. If you have any questions feel free to reach out to us at The CannaConsortium and continue to follow along through our Instagram, LinkedIn group and blogs for more information and updates on all things cannabis!

Works Cited

Bateman, Alexis, and Leonardo Bonanni. “What Supply Chain Transparency Really Means.” Harvard Business Review, 20 Aug. 2019, hbr.org/2019/08/what-supply-chain-transparency-really-means.

“Certificate of Conformance vs. Certificate of Analysis.” American Precision Products, www.injection-moldings.com/groups/engineering-team/certificate-conformance-vs-certificate-analysis.

Group, SaleHoo. “What Is a MOQ?” SaleHoo, 7 Apr. 2020, www.salehoo.com/blog/what-is-a-moq#:~:text=MOQ is an acronym which,to deal with that supplier.

Hillstead, Nicole. “Three Reasons White-Labeling Your Products Is a Fab Idea (and Two Reasons It Isn’t).” MarketingProfs, MarketingProfs, 23 Mar. 2015, www.marketingprofs.com/opinions/2015/27296/three-reasons-white-labeling-your-products-is-a-fab-idea-and-two-reasons-it-isnt.

Lazazzera, Richard. “MOQ Meaning: What Is MOQ & What You Need to Know.” A Better Lemonade Stand, 27 Mar. 2020, www.abetterlemonadestand.com/what-is-moq-meaning/.

Reaume, Justin. “6 Procurement Actions That Can Boost Your Business.” Recently Filed RSS, 15 May 2017, www.scmr.com/article/6_procurement_actions_that_can_boost_your_business.