Short answer: Turnkey vs consigned ingredients comes down to who buys and stands behind the raw materials. In turnkey manufacturing the manufacturer sources everything; with consigned (customer-supplied) materials, you buy some inputs and ship them in. For supplements, the plant must still run at least one identity test on every dietary ingredient before use, whoever bought it. [1]
Definition: Consigned ingredients are raw materials or packaging that a brand buys from its own suppliers and delivers to its contract manufacturer, which then tests, stores and uses them for that brand's batches. Turnkey means the manufacturer buys and qualifies those inputs itself.
Key rules at a glance (21 CFR Part 111)
- 1 identity test or examination, at least, on each dietary-ingredient component before use, unless FDA grants an exemption petition. [1]
- 3 things a supplier COA must show before a plant can rely on it: the test method(s), the limits, and the actual results. [1]
- 5 conditions for relying on a supplier COA: qualify the supplier by confirming its results, a complete COA, documentation, periodic re-confirmation, and QC approval. [1]
- 3 kinds of component specification: identity; what's needed for purity, strength and composition; and contamination limits. [2]
What is turnkey manufacturing, and what does "consigned" change?
PMG describes turnkey manufacturing as "an end-to-end approach where one partner coordinates the work from product concept and formulation through testing, compliant production, packaging, and launch readiness." Sourcing is part of that single relationship: PMG lists "formulation, sourcing, testing, compliance, production, and the packaging decisions" as the launch work turnkey brings together. [4]
A consigned arrangement splits that chain. The brand keeps one or more purchasing relationships, usually a branded or patented ingredient, a flavor house, or custom-printed packaging, and the manufacturer receives those goods instead of buying them. Many projects are hybrids: the brand consigns one signature input and the manufacturer sources the rest.
Turnkey vs consigned vs hybrid: how do they compare?
| Question | Turnkey | Consigned (customer-supplied) | Hybrid |
|---|---|---|---|
| Who buys the raw materials? | Manufacturer | Brand | Brand buys 1–2 signature inputs; manufacturer buys the rest |
| Who carries the inventory cash? | Built into your per-unit price | You, up front, before the batch | Split |
| Who chases late deliveries? | Manufacturer | You; a late drum can delay the whole run | You, for consigned items |
| Identity testing of supplement ingredients | Required either way: at least one identity test on each dietary ingredient before use [1] | ||
| Can a supplier COA be relied on? | For other components only, and only after the plant qualifies the supplier and documents it [1] | ||
| Best fit | First launches, stock formulas, brands that want one accountable partner | Brands with negotiated pricing or exclusive ingredients | Brands switching manufacturers that want to keep a flavor house or patented ingredient |
Who Buys, Who Tests
| Turnkey | Consigned | Hybrid | |
|---|---|---|---|
| Who buys | Manufacturer | Brand | Split |
| Who pays up front | Built into per-unit price | Brand | Split |
| Who chases delays | Manufacturer | Brand | Brand, for consigned items |
What do FDA's supplement GMP rules require when you supply your own ingredients?
Consigning materials does not move the testing duty to you. Under FDA's dietary supplement GMP rule, the manufacturer must, before using a component, "Conduct at least one appropriate test or examination to verify the identity of any component that is a dietary ingredient," unless FDA grants an exemption petition. [1]
For other components, the plant may rely on a supplier's certificate of analysis (COA) only if it first qualifies that supplier "through confirmation of the results of the supplier's tests or examinations," the COA describes the methods, limits and actual results, the qualification is documented, the COA is periodically re-confirmed, and quality control approves the basis for qualification. [1]
The manufacturer must also set component specifications, including an identity specification, specifications needed for the finished product's purity, strength and composition, and "limits on those types of contamination that may adulterate" the batch [2], and it must determine whether those specifications are met. [3]
In practice: your supplier becomes the manufacturer's supplier too. Expect to share supplier contacts and COAs so the plant can qualify them, and expect consigned lots to be held until testing clears them.
When does it make sense to supply your own ingredients?
- You own access to the ingredient. A patented or trademarked branded ingredient, an exclusive botanical source, or a custom flavor you developed with a flavor house.
- You're switching manufacturers and want the product to stay the same. PMG's quote brief asks switching brands for "preferred vendors (for example, your flavor house)" along with the formula and SOPs, and its switch manufacturers page asks for "SOP and pricing from your current manufacturer." [6]
- You already buy at volume and your contract price beats what a manufacturer can get for one brand.
When turnkey is usually simpler: a first launch, a stock formula, or a team without someone to manage purchase orders, freight and COAs. On PMG's numbers, private label starts from 1,000 units, and typical first runs are "$5,000–$25,000 for stock formulas, $25,000+ for custom." [5] At those sizes, one late consigned drum can cost more in delay than you save on price.
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What costs and risks do brands miss with consigned materials?
- Testing and hold time on every incoming lot, as required above.
- Overage. Ask how much extra material the plant needs above the batch formula for line losses, and who owns leftovers.
- Rejected lots. If your ingredient fails the plant's identity or contamination specification, the batch waits until you replace it.
- Storage and handling. Ask whether the plant charges for receiving, warehousing or special storage.
- Scheduling. A production slot is usually booked around all materials arriving; a late consigned item can push the run.
The Consignment Readiness Check (printable)
Download the fillable checklist (PDF)
Before you tell a manufacturer you'll supply an ingredient, confirm you can answer yes to each:
- I have the supplier's name, address and a quality contact the plant can reach.
- I have a lot-specific COA that shows test methods, limits and actual results.
- I have the ingredient's specification sheet (identity, strength, contaminant limits).
- I know how much overage the plant needs and who keeps leftovers.
- I can deliver to the plant before the booked production date, with a buffer.
- I know the storage conditions (temperature, humidity, light) and shelf life.
- I've asked what happens, and who pays, if a lot fails incoming testing.
- I've compared my landed cost (price + freight + testing + overage) with a turnkey quote.
- The manufacturing agreement says who owns consigned materials and finished goods.
- My SOPs and formula reference the same ingredient grade and supplier I'm consigning.
Frequently asked questions
Is consigned manufacturing cheaper than turnkey?
Sometimes, on material price. Compare landed cost, including freight, incoming testing, overage and delay risk, against the manufacturer's turnkey quote.
Can I skip testing if my supplier sends a COA?
Not for dietary ingredients in supplements. The plant must run at least one identity test on each before use unless FDA grants an exemption. For other components, a COA can be relied on only after the supplier is qualified. [1]
Can I keep my flavor house when I switch manufacturers?
Often, yes. Include preferred vendors in your quote brief so the new manufacturer can say whether it will buy from them or receive consigned material.
Does PMG offer turnkey manufacturing?
Yes. PMG describes turnkey manufacturing as one partner coordinating formulation, sourcing, testing, compliant production, packaging and launch readiness. [4]
What should I send to get a quote either way?
Your formula or spec sheet, preferred vendors, SOPs, a recent COA, your label and component list, and expected volumes. See PMG's product brief checklist.
Glossary
- Turnkey: the manufacturer sources and qualifies all inputs and coordinates the project end to end.
- Consigned (customer-supplied) material: an input the brand buys and delivers to the manufacturer.
- Component: a material used to make the product; in Part 111, dietary ingredients are one kind of component.
- Certificate of analysis (COA): a lot-specific record of tests, methods, limits and results.
- Supplier qualification: confirming a supplier's COA results through the plant's own testing before relying on them.
- Overage: extra material added above the batch formula to cover losses.
- Landed cost: material price plus freight, testing, handling and storage.
Have a product in mind? Ask us directly.
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Read the article →Sources and references
- 1.21 CFR 111.75, What must you do to determine whether specifications are met? (eCFR) https://www.ecfr.gov/current/title-21/chapter-I/subchapter-B/part-111/subpart-E/section-111.75
- 2.21 CFR 111.70, What specifications must you establish? (eCFR) https://www.ecfr.gov/current/title-21/chapter-I/subchapter-B/part-111/subpart-E/section-111.70
- 3.21 CFR 111.73, What is your responsibility for determining whether established specifications are met? (eCFR) https://www.ecfr.gov/current/title-21/chapter-I/subchapter-B/part-111/subpart-E/section-111.73
- 4.Product Management Group, Private Label vs Custom Formulation https://productmgmtgroup.com/services/private-label-vs-custom-formulation
- 5.Product Management Group, Start a Project https://productmgmtgroup.com/contact
- 6.Product Management Group, Switch manufacturers https://productmgmtgroup.com/switch-manufacturers
Fact-checked: 14 claims verified against sources; 1 adjusted.
Consignment Readiness Checklist
A fillable 1-page checklist with all 10 readiness checks and a landed-cost vs turnkey worksheet.
PDF · 1 page
About Product Management Group
PMG is a full-service private label manufacturing partner for skincare, nutraceuticals, supplements, personal care, and wellness brands. We handle everything from R&D and formulation through manufacturing, packaging, regulatory compliance, and fulfillment, working with FDA-registered, GMP-compliant partner facilities in Florida, North Carolina, Texas, Minnesota, and Arizona. We work with everyone from first-time founders to established retail brands, with minimums starting at 1,000 units.