Home Care Contract Manufacturing Market Procurement Intelligence, Supplier Intelligence, Supplier Ranking, Pricing & Cost Structure Intelligence, Best Practices, Engagement Model, Low & Best Cost Country, Day One Analysis Report, 2020 - 2025

Category Overview

“With the rising demand for homecare cleaning products, a sizable part of the manufacturing is being outsourced to contract manufacturers.”

Household fabric cleaners are expected to witness the highest growth rate of 11.42% over the forecast period owing to the rise in disposable income and improvements in lifestyle in regions, such as APAC. Other key factors for the market growth include:

• Growing awareness about the benefits of fabric cleaning products to maintain the quality of clothes

• Efforts by market players to launch less water-dependent fabric cleaning products to cater to the demands of countries, such as India, China, and Indonesia, which have a scarcity of water

The homecare products industry has witnessed more than 70% outsourcing to reduce capital and labor costs. Appointing a contract manufacturer also enables OEMs to access markets that have strict rules and regulations for setting up a factory.

Supplier Intelligence

“The home care contract manufacturing market is a fragment with several contract manufacturers presented regionally, which reduces the bargaining power of suppliers.”

The contract manufacturing market for homecare products is highly fragmented with suppliers present across different regions. Moreover, the low switching costs associated with manufacturing have led buyers to have moderate bargaining power over suppliers. However, training and product testing costs may increase in case a new supplier is appointed.

A considerable number of contract manufacturers present across different geographies reduces the bargaining power of suppliers. Hydraulic acid poses a threat of substitute to the market for homecare cleaning products.

Pricing and Cost Intelligence

“Raw materials take up three-fourth of the overall cost of manufacturing. Chelating agents are the largest cost head under raw materials.”

Raw materials cost about 75% of the overall cost of manufacturing. In terms of a liquid concentrate of the cleaner, water accounted for the highest percentage in terms of weight, covering around 40-50% of the solution, followed by surfactants covering 10%. In 2018, surfactant prices declined despite higher crude oil prices, but are expected to become stable over the forecast period.

Apart from the manufacturing cost, quality check audits, product testing, and training are the major components considered in the total cost of ownership when procuring products from home care contract manufacturing suppliers. The approved provider model is the key operating model among OEMs and contract manufacturers in the homecare products market as the suppliers need to meet a predefined set of qualification characteristics and quality standards

Cost-plus pricing is the most common form of pricing followed in the industry. Although this helps the suppliers maximize their profits, it provides the least value-add.

Sourcing Intelligence

“The U.S. is the highest exporter of surface-active agents, one of the key materials required to manufacture homecare cleaning products.”

The U.S. has been a key exporter of surface-active agents over the last five years. In 2019, it accounted for 10% of the overall exports globally. From a cost perspective, China and India are the leading countries in APAC.

In the long run, contract manufacturers agree to reduce the manufacturing cost by eliminating or replacing certain components listed on the bill of materials, thus securing alternate sources for particular product materials based on leverage the contract manufacturer has in the global technology supply chain and improving product assembly or test methods

“In Asia, China and India are the low-cost countries for contract manufacturing of homecare products.”

From a sourcing perspective, the majority of suppliers opt for a bundled outsourcing engagement model as it reduces the complexities associated with in-house logistics.

Suppliers widely prefer approved provider operating models to reduce risks and improve the potential for value creation. As such, suppliers are expected to move from offering generic services to proprietary services in the future. The home care contract manufacturing market procurement intelligence report also provides details regarding quick wins, portfolio analysis, key negotiation strategies of key suppliers, and low-cost/best-cost sourcing analysis.

Apart from home care products, the contract manufacturers present in this space also offers manufacturing capabilities for personal care. The personal care contract manufacturing industry is witnessing strong growth due to changes in shopping patterns and formulations. Brands are focusing on partnering with contract manufacturers to avoid high setup costs in the countries where they do not have production facility. The major selection criteria are certifications and ingredients used by the contract manufacturer, brands prefer partnering with manufacturers who use organic ingredients in their production process.