Choosing the Right Toll Processing Partner to Navigate Supply Chain Disruption

In a sector where capacity constraints, regulatory demands, and raw material shortages increasingly threaten day-to-day operations, it is crucial for chemical processors to understand the key factors to consider when selecting a toll processing partner

Chemical manufacturers are currently working against a backdrop of persistent supply chain disruption, mounting regulatory pressure and rising operational costs. A combination of geopolitical instability, changing trade policies, constrained logistics capacity, volatile energy markets and labor shortages has increased lead times and exposed vulnerabilities in highly interconnected production networks. For many producers, particularly in specialty chemicals, intermediates, polymers and formulated products, these pressures are compounded by limited capacity and flexibility within their existing production infrastructure.

As chemical products underpin the vast majority of industrial supply chains, disruption in the sector can have wider economic consequences, affecting industries ranging from construction and automotive to food production and healthcare. This adds urgency to the need for more resilient and flexible manufacturing models across the chemical sector.

While strategies such as reshoring, supplier diversification and regionalization of manufacturing are increasingly being considered, these approaches require long project timelines, regulatory approvals and substantial capital investment. New capacity cannot be brought online quickly enough to address short-term disruptions, nor can it always be justified when demand is uncertain. As a result, chemical manufacturers are under pressure to identify ways of introducing flexibility without committing to permanent or capital-intensive changes.

Toll processing has emerged as a practical and increasingly attractive response to these constraints. By outsourcing, chemical manufacturers can alleviate bottlenecks, maintain supply continuity and manage fluctuations in demand. When used effectively, toll processing can improve resilience and enable more flexible capacity planning across chemical value chains.

Where toll processing adds value

Flexibility is often the most immediate and visible benefit of working with a toll processing partner, particularly when lead times for new equipment or facility upgrades make internal expansion impractical.

In fact, toll processing is most commonly used when internal production is operating near capacity and additional throughput is required to meet market and customer demands. In capital-intensive processes, the installation of new tools and equipment is constrained by long lead times, permits and related requirements, and the availability of capital. Outsourcing bridges these gaps, as experienced toll processors facilities can scale production up at pace when required, supporting higher throughput and improved economies of scale while maintaining the same quality and safety standards expected under normal operating conditions.

Short-term use cases include support during planned maintenance outages, unplanned equipment failures or to relieve bottlenecks. In such scenarios, toll processors can take on production to maintain service levels. Toll processing can also be used to manage temporary demand spikes caused by seasonality, market volatility or sudden increases in customer demand.

Beyond contingency use, toll processing plays an important role in product development as manufacturers may use external capacity to validate processes and market demand before committing to permanent in-house assets. This approach reduces investment risk while allowing process engineers to refine parameters under production-scale conditions.

In these situations, toll processors can act as an extension of a manufacturer’s own technical and quality teams. Access to on-site laboratory services, pilot-scale facilities and formulation expertise can support early-stage trials, optimization of blends and faster introduction of new products. For smaller manufacturers or those entering new markets, this type of support can be particularly valuable, offering a route to laboratory validation and performance benchmarking without the need to build these capabilities in-house.

Matching requirements and technical capability

One of the most important factors in successfully working with a toll processing partner is technical compatibility. Toll processors must have the facilities, equipment and expertise required to carry out defined operations under specific conditions and to the necessary quality standards. Where there is poor alignment between internal process design and external capability, the result can be product losses, variable quality and increased operational risk.

Consistency in terms of scale and throughput is equally important. Toll processors must be able to accommodate required batch sizes or continuous production rates while maintaining control of critical processes. Facilities with limited turndown flexibility may struggle to support varying production volumes, particularly where requirements fluctuate in size or frequency.

Utilities and infrastructure capacity to support various chemical processes and operations are other considerations. External facilities must operate in compliance with environmental requirements and regulations, including the appropriate management of waste streams. Where hazardous materials are involved, appropriate zoning, containment and emergency response infrastructure are essential.

Finally, facilities equipped with advanced automation, digital batch control and in-line monitoring can offer tighter process control and improved reproducibility, particularly for complex formulations or multi-step processes.

Quality, compliance and regulations

Quality management and regulatory compliance underpin all toll processing arrangements. External partners must operate under quality systems that align with the chemical manufacturer’s internal governance frameworks and sector-specific regulatory obligations. This includes formalized documentation practices, deviation management procedures and change control processes to ensure that modifications to equipment, procedures or materials do not compromise product quality and integrity.

Traceability of raw materials, intermediates and finished batches is essential for effective quality management and for meeting customer and regulatory expectations. As such, toll processors should be able to demonstrate robust tracking, batch documentation and record retention practices. Where products are supplied into regulated downstream markets, additional requirements related to product stewardship, environmental reporting or customer audits may apply.

Environmental, health and safety performance is another critical component to consider when selecting a toll processing partner. Facilities must be capable of handling hazardous, flammable or toxic materials in compliance with applicable regulations and permit conditions. For manufacturers operating across multiple jurisdictions, toll processors with experience navigating different regulatory regimes can reduce compliance complexity and support consistent quality standards across geographically distributed networks.

Building supply chain resilience

One of the main benefits of established toll processors lies in the practical value of their supplier and logistics networks, particularly during periods of scarcity. Many maintain up-to-date databases of surplus stock, alternative raw material sources and pre-qualified service providers, allowing them to source hard-to-find inputs more quickly when shortages arise. In practical terms, this can mean the difference between a line standing idle and production continuing.

In addition, toll processors often maintain a strong network of partners. Beyond physical production capacity, these networks can extend service coverage to include warehousing, logistics coordination, import and export support, labelling, packing and batch traceability. Such integrated service provision can simplify outsourcing arrangements and improve coordination across production and distribution activities. For chemical manufacturers looking to reduce their reliance on single sources, the breadth and depth of a toll processor’s network is therefore a key consideration.

Choosing the right partner

Selecting a toll processor should not simply be a matter of availability. In technically demanding and tightly regulated chemical manufacturing environments, the wrong choice can result in delays, recalls, or regulatory non-compliance. As such, potential partners should be evaluated according to the following criteria:

Regulatory compliance and certification. Toll processors must operate under quality and regulatory frameworks appropriate to the intended products and markets. Compliance with recognised quality management standards and relevant sector-specific requirements reduces operational and regulatory risk. Facilities should support client audits, maintain rigorous documentation and provide full batch traceability.

Technical expertise and capabilities. Potential partners should demonstrate experience with comparable chemistries, operating conditions and material hazard classes. The availability of suitable equipment, containment systems and control infrastructure is essential to maintain product quality and process safety. Without the appropriate technical capability and expertise, the risk of contamination, reduced product quality and production delays increases.

Quality control and analytical support. Robust in-house quality control capability that supports method validation, stability testing and analytical profiling is a valuable asset. Equally important is adherence to data integrity standards. Weak testing or data practices can lead to delayed approvals, rejected batches, regulatory warnings and customer complaints.

Confidentiality and IP protection. Intellectual Property (IP) is the lifeblood of many chemical businesses. Toll processing arrangements often involve the transfer of proprietary formulations, processes or customer information. As such, it is crucial to ensure toll processing partners have airtight non-disclosure agreements and IP protection protocols in shared manufacturing environments, as a breach of confidentiality or IP leakage can have serious commercial consequences.

Supply chain integration and responsiveness. A toll processor’s location, supplier network, and operational agility all influence their ability to deliver on time. When considering potential partners, evaluate their access to key raw materials, ability to pivot during disruptions, and logistics support services. This is important because speed is crucial, especially when disruption strikes or there is an unexpected spike in demand.

Reputation and track record. Demonstrated performance in similar processing environments reduces operational risk and boosts confidence. Due diligence is vital – reference checks, a review of audit outcomes and assessing previous projects will provide insight into a potential partner’s reliability and technical competence.

Transparent commercial terms. From pricing structures to liability clauses, clarity is key. Pricing structures, service levels, responsibilities and liability allocation should be clearly outlined to avoid disputes and misaligned expectations. Well-defined contractual frameworks support stable and productive long-term collaboration.

While the advantages of toll processing are clear, outsourcing is not without challenges. Choosing the wrong partner can expose companies to risks ranging from scheduling conflicts and capacity limitations to data security concerns and regulatory exposure. Taken together, these risks underline the importance of careful and informed partner selection.

Long-term integration

The ongoing impact of supply chain disruption has prompted many chemical manufacturers to reconsider traditional just-in-time operating models. Toll processing is increasingly being incorporated into long-term capacity planning as a means of managing uncertainty without committing to permanent infrastructure expansion.

Integrating toll processing into long-term strategy can support regional production approaches, enabling closer proximity to customers while avoiding immediate capital investment in new facilities. It can also support innovation pipelines, allowing pilot-scale production and early commercialisation to proceed without diverting internal resources from established product lines. Over time, this approach can improve organisational agility and reduce financial exposure to fixed asset commitments in volatile markets. 

Recent years have shown that disruption is no longer an exception but a persistent feature of the operating environment. Whether driven by geopolitical instability, labour shortages or supply shocks, chemical manufacturers must plan for ongoing volatility.

Toll processing offers a practical mechanism for managing capacity constraints, mitigating supply chain risk and improving resilience. As market volatility continues to rise and operational demands grow more complex, well-structured toll processing partnerships are likely to play an increasingly important role. When selected and managed carefully, toll processors can provide the flexibility, technical capability and reliability needed not just to manage disruption, but to operate competitively in uncertain conditions. ♦ Edited by Mary Page Bailey

Author

Ben Beattie (Email: ben@forbeats.co.uk; Phone: +44 (0) 7818 654 789) is a Director at toll processing and contract manufacturing specialist Forbeats Ltd., based in Liverpool, U.K. Beattie worked closely with his father, Phil, who founded the company in 2009 until he retired in 2022. Having developed a deep understanding of the business and the market, he now serves as a Director alongside his brother, Harry. Since taking over the reins with his brother, the company has gone on to grow its footprint across the USA and Europe.