The contract packing industry is characterised by a profusion of services, resulting from an increasingly complex set of demands, pointing to stronger partnerships between co-packers and brand owners. The continuous challenge for today’s co-packer is to evolve and adopt a fully-fledged service model, while the challenge for brand owners is to realise the value of this partnership and nurture its growth to realise untapped profits. To quote Donald Trump: ‘Sometimes your best investments are the ones you didn’t make.’
It has been said that all the reasons for using a co-packer can be summed up in two words – expenses and regulations.
By using a co-packer, brand owners do not need to invest in facilities, equipment and resources. Additionally, overseeing production operations devours valuable time required for selling and disturbing products.
Regulations associated with FMCG manufacturing, particularly food, beverage, pharmaceutical and cosmetics products, are complex, costly and time consuming; and the handling and storage of raw materials and finished products, as well as the cleanliness of facilities, are highly regulated. By using a contract packer, brand owners can avoid plant health and safety inspections, staffing requirements, OSHA and workers’ compensation issues, capital expenditure and myriad record-keeping requirements.
FMCG manufacturers and brand owners face many challenges – an uncertain economy, service delivery issues and commodity price fluctuations, to name a few. The benefit of using a co-packer is that they understand their costs and are much more nimble and efficient in their operations.
Another benefit of partnering with a contract packer/manufacturer is its provision of a full-service package, from investing in new capabilities, equipment and technologies to its diversified logistics and distribution offering.
With a global focus on the need to reduce carbon footprints, a trend emerging abroad is that of embedded operations – where brand owners are moving their co-packers into their distribution centres, and occasionally into their manufacturing facilities. With this model, the co-packer supplies the labour and equipment and manages the operation. This offers a sustainability advantage as transportation is reduced, while communication and quality is improved thanks to the close proximity of the customer and co-packer.
Whether for promotional products, trial products or short runs, peak-season requirements or on-going outsourced services for private labels or brand leaders, co-packers are continuing to evolve to provide a full service offering with a broad range of benefits, encompassing reduced bottlenecks, increased capacity and flexibility, and the latest insights into packaging innovation.
However you look at it, the key to successful brand/co-packer relations is to treat the latter as a brand, not just a vendor and not just as a supplier of traditional core packaging operations.