If you are a busy entrepreneur looking to save time, money, and resources, co-packing may be the right choice for you. But, what is co-packing?
Co-packing, also known as contract packaging, is the overall process of assembling a product or goods into its final, finished packaging and outsourcing the manufacturing and packaging of a product for wholesale. It is beneficial for those who don’t have space or resources for their specific needs and those who have a product they want to sell on a large scale.
Raw materials and packaging may be provided by or owned by either the producer or customer. The invoice for the product may be for anything ranging from materials and services to warehousing, storage, and profit.
Co-packing can be a simple or complex process depending on the specific scope of the product packaging, which ranges across retail, commercial or trade industries. Depending on the product, the finished product may come in a variety of forms and packaging.
Co-packers can be tasked with something as simple as adding a barcode to a product or as complex as designing, producing, and fulfilling the entire package. Contract packaging and Co-packing companies provide packaging services to product manufacturers and often act as an extension of the company.
What is co-packing and how does co-packing work?
Co-packing usually begins with a co-pack agreement between co-packing companies and their clients. The two companies come to a formal co-packing agreement that outlines the nature of their relationship.
An example of a co-packing agreement between a client and their co-packer allows the co-packer to handle all the packaging processes for the client. This contract enables the client to focus on its specialty, production, and brand. In contrast, the co-packer focuses on packaging, ingredient sourcing, and logistics.
Why use a contract packager/ co-packer?
There are many reasons why your company may want to consider contract packing as a way of streamlining its business production and operations, including:
Cost
For most companies that opt to enter into a co-packing agreement, the cost is the main driving factor. Instead of the customer planning and establishing a packaging unit, they can save these costs by outsourcing the services of a co-packer.
Contract packagers save you time and money by having the processes to manufacture food products and scale them for any size market. The cost of purchasing your own food-grade manufacturing machines and the labor cost of hiring and training employees to run them can be very expensive and time-consuming. Luckily, the facilities and expertise that co-packing companies provide allow you to manage the costs of manufacturing your product and scale up as your product becomes more successful.
Technology
Co-packers have the correct facilities and invest many resources in technology that helps make the packing exercise smooth and time-efficient. Many companies, especially the food business and smaller companies, lack the required technology, making it necessary to seek a partnership with a co-packer.
Spike in demand
A co-packer’s services can come in handy if a company is experiencing an increase in demand for its products. This sudden spike in demand may mean the company might not be able to meet the packaging requirements at its facility, making it imperative that they find a contract packer to produce their products at a level that can handle increased demands.
Specialization
Specialization is essential when running a successful business. Because of the demand for specialized equipment and staffing for packaging, contract packaging services are typically outsourced to co-packaging companies. Companies that choose to specialize in a specific niche or task can find the services of a co-packer to be necessary, prompting them to enter into a co-packing agreement.
A contract packaging company specializes in handling varying levels of the packaging sequence. They have many in-house resources or outside partners to respond to specific product packaging needs for whatever timeline is needed. Ideally, this gives a contract manufacturer and product manager great flexibility in defining the packaging process based on the needs of the product.
How to find and choose the perfect co-packer
As previously mentioned, co-packing focuses on the packaging and branding of products given to the co-packer with permission and instruction from the client. The services of a co-packer can vary across many industries.
The most common industries to benefit from a co-packing agreement are:
- Cosmetics – The cosmetic industry relies heavily on the right packaging and branding to make a splash in the market. With the right product, the services of a co-packer can help a brand in this industry transform into a market leader.
- Pharmaceuticals – More often than not, medicine isn’t packed by its manufacturing company; instead, co-packing is a standard method to keep up with production and packaging demands.
- Food and Beverages – Bottling and packaging companies are a must-have for the food and beverage industry. Without co-packers, it would present a challenge for a food and beverage manufacturer to distribute its products successfully on a large scale.
Besides industry, there are many things to consider when choosing the right co-packing company. The process can get very complex depending on the product you’re manufacturing. However, listed are common factors to consider when selecting a co-packing company.
Evaluate your needs
The first thing to decide is what you need and expect from a co-packer. Are you looking for a partner to supply and source ingredients or someone to only package your products? Perhaps you need a company to see your food product through the entire food manufacturing process from beginning to end. Either way, as a brand owner, it is imperative to understand precisely what you need from a co-packer before making a decision.
The location of the co-packer
It’s best to choose a co-packer close to the market where you sell your products. This ensures that your food is delivered to market at its peak freshness. Also, being close to your co-packer allows you to be more involved with the manufacturing and packaging of the finished product. It helps maintain an open line of communication throughout the process.
Is co-packing right for you?
Ultimately it comes down to two important factors; what you produce and what quantity. No matter what scope of product packaging a product manufacturer or product manager has, a good co-packer will be with you every step of the way to ensure the product is delivered on time, every time.