Managing low volume API procurement can be demanding, as any buyers in Specials can tell you.
Managing low volume API procurement can be demanding, as any buyers in Specials can tell you.
The challenge is that your order value might be relatively low, but you probably still require almost the same regulatory support associated with higher volume procurement.
Generally speaking any API order with a total delivered value of around £1000 or less becomes problematic for the following reasons:
The £1000 invoice value probably includes some or all of the following cost contributors:
- Direct material cost,
- Cost for special pack size / non-standard packing
- QC release costs which will be the same for a kilo as for a tonne
- Overhead to process the order
- Bank charges to process the payment, and interest
- Direct shipping costs to move the consignment from factory to country of destination
- And then, finally, the manufacturer’s profit margin
Additional costs may be further incurred at destination for local clearance, especially if goods are moved via airfreight which involves minimum charges to clear customs and local delivery. If a distributor is the managing contract partner, then they also need to take a slice of the £1000 to pay for their contribution.
If the order requires initial manufacturer approval through completion of questionnaires; if it requires specific Quality statements to be created in respect of BSE/TSE, Residual Solvents, perhaps allergens or Melamine; copies of regulatory certification such as Written Confirmations, GMP certificates etc. If there are specific additional technical questions on eg Particle Size Distribution which require a response from the manufacturer’s Q department – all these elements incur a cost to the manufacturer and supplier to provide them.
Thus thinking back to the £1000 invoice value and assuming the manufacturer could make an unlikely 100% nominal gross profit on direct material cost of £500, then after allocation of costs to service the order, the net profit for the manufacturer might easily evaporate to almost nothing.
If you are a new customer for a manufacturer and bring them this kind of “opportunity”, there is therefore a good chance your enquiry will be completely ignored. On the other hand, if you buy through someone who has existing business with that same manufacturer, then you should find things easier.
Wessex has volume business but also supplies around 70 different low volume active substances to various categories of customers including Specials manufacturers, Contract Research Organisations etc.
The ability to supply the low volume orders with appropriate regulatory relies heavily on the support of the manufacturer and their trust in us as a serious partner – a trust usually gained through years of good business. This provides the good-will leverage to ensure any low volume enquiries we give get treated with respect and avoids them being treated as more trouble then they are worth.