Dec
08

What is Toll Processing?

Metal Rolls

Sometimes, it’s necessary for material solutions manufacturers to partner with other manufacturers to process their material. This partnership is called toll processing and is often used for specialized products or quick-turn projects.

Toll Processing Basics

Companies use toll processors to fill in production gaps. Say a customer’s product requires value-added processing that isn’t covered by equipment in-house or maybe the company doesn’t have the production capacity to fulfill the order and must outsource part of it.

Instead of providing a customer with a semi-finished product, the manufacturer can partner with toll processing services to quickly execute and deliver the order.

Definition of Toll Processing

Toll processing is essentially contracting with third-party companies to process materials to customer specifications for payment—in other words, for a toll. Toll manufacturers have many roles and can provide a range of products and services.

The Role of a Toll Manufacturer

A toll manufacturer is a vendor that can handle processes that the other company cannot. Toll manufacturing might involve slitting, edging, coating, or finishing and then shipping that semi-finished product back to the original company.

Different types of toll processing services exist, and metalworking companies can engage toll processors to fill in production gaps.

Types of Toll Processing Services

Here are a few toll-processing services that companies need:

  • Cut-to-Length
  • Slitting
  • Edge Conditioning
  • Coating
  • Finishing

There are many reasons to use toll processing, and the decision is made per project.

Steel coil cut machine

When to Use Toll Processing

Common Uses of Toll Processing

Precision metal companies are highly specialized, so they sometimes outsource processes outside their production capabilities.

Examples include specialized coating for the automotive and medical industry or custom packing for food producers.

Depending on each project, a company will decide whether to hire a toll processor or contract manufacturer.

Toll Processing Versus Contract Manufacturing

Contract manufacturing and toll processing are both methods for a third party to manufacture whole products or ingredients, or to complete crucial processes. However, the processes are quite different.

Toll processing allows the manufacturer to maintain control of the production process and supply chain because the toll processor doesn’t handle the entire project. Conversely, in contract manufacturing, the contractor is responsible for the entire project.

Although toll processing and contract manufacturing can produce high-quality products quickly and efficiently, there are a few challenges to keep in mind.

Potential Challenges

One risk posed by toll processing is the safety of a company’s trade secrets, since tolling services producing semi-finished goods need access to the manufacturer’s proprietary information. Fortunately, a legally binding toll manufacturing agreement can prevent sensitive information leaks. Additionally, timing is sometimes a concern since the client-facing company isn’t in total control of the supply chain.

Despite potential challenges, there are many benefits to toll processing. When done correctly, the manufacturing companies and their clients can reap the rewards.

Toll Manufacturing Agreement

Reap the Rewards of Toll Processing

Toll processing can provide many benefits to the source company and their customers, so it’s a common practice. Here are some of the rewards that toll-processing services offer:

  • Capital investment savings by not purchasing specialized equipment
  • Increased efficiency and sustainability
  • Products are easily customized if the toll processor is flexible
  • Consistent quality and on-demand capabilities
  • Availability of specialty certifications and permits
  • Consistent quality and quality management systems
  • Quality products delivered on time

Since many toll processing services offer one flat fee to their partners, yet another benefit is savings on space, labor, and overall cost. This is why toll processing is such a popular practice.

Toll Processing and You

Toll processing is often beneficial, but it’s not always the best option. Thus, you should understand the factors to consider in partnering with a toll processor or contract manufacturer—and when to keep production in-house.

Factors to Consider

The first factor to consider when determining whether tolling is the best manufacturing process is production capacity. A metalworker might not have machinery and labor available for quick-turn projects, so if there’s a time constraint, they might outsource to a toll manufacturing partner.

A second factor is specialized equipment. If a company doesn’t have the gear to execute a project, they can find a toll processer to help.

A third factor is certifications, which are necessary to safely work with some products. Here are a few certifications that manufacturers and toll processing services might have:

  • ISO 9001
  • cGMP
  • FSMA

Each industry has its own specific certifications, and these are important in selecting a toll processing partner.

How to Select a Toll Processing Partner

To select a toll processing partner, consider the advantages of the tolling process and make sure that your potential partner checks all the boxes:

  • Production capabilities
  • Current capacity
  • Reputation
  • Certifications
  • Fair pricing

Because companies must trust a toll processor to deliver high-quality products, they must find the right partner before they move on to the next steps.

Manufacturing partners

Next Steps

Once you find a toll processor, consult with them to ensure they’re the right fit. Learn about their supply chain and quality control processes. If you’re confident they’ll make your manufacturing process easy, reduce your risk, save you money, and deliver high-quality products on time, they could be the best toll processing service!

Contact Ulbrich Today

Interested in toll processing with Ulbrich? Review our cut-to-length line capabilities to save time and money for your next project.

Contact an Ulbrich specialist today to learn how we can become an extension of your team.

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