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Collaboration drives contract manufacturer's success

By Hank Schultz , 27-Nov-2012
Last updated on 27-Nov-2012 at 17:57 GMT2012-11-27T17:57:23Z

A commitment to quality and to an “abundance mentality” has driven contract manufacturer VMI Nutrition to far surpass its original goals, said managing partner Bruce Remund.

Inherent in the quality message, Remund said, is a commitment to supply chain transparency. The company, based in Salt Lake City, UT, has been a leader in trying to clean up the supply end of the business.

“We have an abundance mentality.  We collaborate, even with competitors.  The only way this industry gets clean is collaboration, period.  It’s the supply chain collaborating with the manufacturers and through to the brands,” Remund told NutraIngredinets-USA.

VMI Nutrition (formerly Vance’s Manufacturing Incorporated) specializes in the production of powdered sports nutrition products. In particular, the company focuses on protein and amino acid formulas.

“As far as volumes, we believe that we are in the top 10 or 15 in powder manufacturing, if not larger,” Remund said. “Particularly in amino acids and proteins, just off of anecdotal evidence, we’re probably no. 1.”

No frills approach

VMI is located in an industrial part of Salt Lake City, where Remund and his partner, Jeff Reynolds, who own the business 50/50, aren’t spending a lot of money on lush landscaping or fancy foyers. Rather, the money is spent inside. The company boasts state-of-the-art manufacturing lines and a full analytical lab subsidiary named Genisys that will soon move off site for more space to add new equipment and to function better as a standalone business.

“This is a low margin business.  It’s not a get rich quick scheme.  We have to have a very long term mentality,” Remund said.

Part of that long term approach is dictated by the continuing need to improve the operation to meet new regulatory requirements.  VMI has come a long way under the partners’ tutelage, and the pace of improvement continues to accelerate.

“We have made monumental improvements in just the last six months. And I’m putting another half million dollars into the facility in GMP improvements,” Remund said.

“We are light years ahead of where we were two or three years ago, but the bar is that much higher.”

It’s becoming imperative in the contract manufacturing sphere to be up to the minute in compliance, Remund said.  That’s not only to satisfy the inspectors; increasingly savvy customers are calling for compliance, too

“There is a lot of movement and investment in facility GMP improvement.  The space is getting more competitive because people are getting better.  The small players are going away or getting less significant,” he said.

Price competition

In an increasingly competitive marketplace, price is always a factor, Remund said, but it is less of a differentiating factor than it might appear at first.

“You’d be surprised about how similar prices are.  It’s like the airlines,” he said.

“You have to be in a competitive ballpark on price.  But I have never had a client said to us that, “We went with you because you were cheapest.’”

So VMI woos customers with a full list of services, from sourcing, to formulation and flavor help, right through to distribution in some cases.  And it’s all done in a spirit of partnership that puts customers more at ease, Remund said.

“The key thing for brands to know is that when they come to VMI, we are like an extension of their brand,” he said.

“Our big push right now is giving our brands full supply chain visibility of where their ingredients are coming from.  And that doesn’t mean they are just coming from distributor X, it means they are coming from manufacturer Y.  We are really going upstream and making significant efforts in going all the way to China, doing site visits and vendor qualification,” Remund said.

“It’s really quite unusual to have a true one-stop shop. Some companies will tell you that they do it all, but they farm out some of the work and you don’t know it. These guys really do it all,” said Loren Israelsen, executive director of the United Natural Products Alliance, of which VMI Nutrition is a member.

Changing sports nutrition market

In addition to knowing manufacturing and customer support, focusing on one facet of the market—powdered sports nutrition products—gives VMI insight into consumer trends. The whole sports nutrition sphere is trending away from  big vats with pictures of guys with no fat and big veins to products that a septuagenarian or a soccer mom might buy.  The category is changing from purely sports nutrition to “active” nutrition, Remund said.

“The demographic has changed in just two years.  It’s not just meat heads anymore.”

“I definitely see this as a permanent shift. It happened first in proteins. Next will he these branched chain amino products.  I think you will see branched chain aminos become food staples like proteins have,” he said.

Careful management and attention to detail has paid off, Remund said.  When he and Reynolds took over in 2006, the company had about 40 workers.  It now employs more than 400.

“When we got into it, our five-year projection was to grow the company to $15 million. Five years later we were at $80 million,” he said. “We believe that we can grow the company significantly the next three to five years. We think it will be double what it is now.”

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