Co-packing (also known as contract packing or contract packaging) has rapidly emerged as a manufacturing alternative to large scale capital investments and infrastructure improvements. In fundamental terms, co-packing is a process where a company outsources the manufacturing and packaging of certain products they sell. Secondary packaging options provide a significant competitive advantage for manufacturers, especially companies in the food and beverage, healthcare and pharmaceutical markets.
Baked goods is a primary example of an industry that benefits substantially from co-packing services since profit margins are tight and delivery schedules are rigid. Co-packing allows a company to secure large scale orders without acquiring additional staff or equipment.
Establishing a co-packing partnership provides a variety of important benefits including:
Acquiring and setting up equipment can add an additional burden to already stretched budgets. Hiring and training new employees is costly, and retention is often difficult. Co-packers offer a fixed manufacturing and packaging cost that allows for easier and more accurate budget planning. Since the co-packer is focused entirely on production, customers can turn their attention to other aspects of the business such as sales and marketing. In other cases, the need for additional production assistance is based on production capabilities and process speeds. In some instances, co-packers can produce a product with lower volumes or slower production speeds without affecting the efficiencies of a higher speed line.
Since co-packaging companies provide additional capacity, customers have the ability to scale production to precisely track demand and provides them with the ability to more easily adjust to variations in production needs based on seasonality of orders.
Private Labeling Options
Private labeling provides companies with the capability to reach a larger potential audience through multiple brands. In many cases, the private labeled product can be sold for less without negatively impacting quality.
Reduced Lead Times
A skilled co-packer will help reduce the production stress on an over committed manufacturing facility. Baked goods co-packing helps reduce lead times by utilizing the provider’s experience and expertise to streamline processes. As a result, the customer’s facility can be utilized for more familiar operations.
A reliable co-packer also provides added comfort and security to customers as it they provide a secondary, or backup source to ensure continued flow of product when seasonality swings in volumes occur, or if mechanical issues develop.
Efficient Product Development
Baked goods produced in a test kitchen or lab environment often translate poorly to existing production facilities. Co-packers experienced in product development understand how the variables between test kitchen and production line and can more easily make the necessary adjustments to achieve the desired result. The co-packer can be a valuable asset in helping to develop a recipe into a sellable creation.
Increased Product Visibility
Large co-packaging companies often have facilities in multiple markets. Production expenses are further mitigated by the reduction in transportation costs. This can help open up new markets for the customer and lead to greater product visibility.
Reduced Environmental Impact
Co-packaging helps reduce damaging emissions because shipment quantities may be better maximized, which means fewer trucks may be on the road.
The food industry is highly regulated, and there are many standards that must be met before a product can be produced and sold. This includes health inspections, insurance provisions, OSHA, the FDA, the Department of Agriculture, as well as Certifications such as Kosher or Organic. For smaller companies, outsourcing to a co-packing company may greatly simplify the regulatory compliance and reduce the annual costs associated with compliance or needed certifications.
Choosing a Co-Packing Partner
Choosing a co-packing partner can be challenging. Most may be listed in various industry publications, or may often be recommended by others you know in the industry or trades. Before entering into an agreement, it is important to research the company, receive product samples produced at the facility, (as products can vary from plant to plant), meet the management and staff, as well as perform initial QA inspections of the facilities . Capacity, transparency, reliability and trustworthiness are critical. Keep in mind, the co-packer is representing your product and brands with the items they produce. You want them to be an extension of your values and someone that will grow with you.
Co-packers that offer “end to end” solutions are preferable because the design, sourcing procurement and packing management functions can be continually improved through collaboration. Sustainability, environmental impact and transportation costs are also essential elements that should be considered when entering into an agreement.
Contact Baker’s Pride today to see how we can bring these benefits and more to your business.