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What Is Contract Packaging And How Does It Work?
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By: Nathan Dube on February 1st, 2021

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What Is Contract Packaging And How Does It Work?

Supply Chain Services/ Contract Packaging  |  Fulfillment

Perhaps you have found yourself in the position of having to find a solution for packaging your products. You have been doing research about setting up a packaging line. In addition to that, you are studying the many different types of packaging machinery and materials.

 

You are also trying to calculate the cost of the labor required to do your packaging in-house. Maybe you are frustrated with the potential cost of all of these items. And to compound these issues, there is the thought of warehousing to consider.

 

Can you fit all the required pieces of your packaging line and supply chain needs at your current location? If not, will your company be able to justify the purchase of a warehouse? And, even if you can, will the warehouse be large enough to fit all the machinery, laborers, and packaging materials in that space? Or, do your space requirements exceed that which you can afford?

 

When mulling over all of these items, it becomes quite clear what a big responsibility and cost running a packaging line and managing your supply chain can be.

 

If only there was some way to outsource all of this stuff! I mean, wouldn't it be great if you had a partner who could take all of this responsibility off of your plate and help you to finance the cost? 

 

Well, that is where a contract packaging company (also known as a co-packer) comes in!

 

Handing your supply chain needs over to a contract packaging company takes much of the work off your plate. This allows you to focus on what your company does best, making your products and consistently optimizing them.

 

With a co-packer like Industrial Packaging on your team, you end up with a partner for your business. One who can handle all aspects of your supply chain. By handing  over your supply chain infrastructure to a contract packaging company, you ensure that your packaging line is being run properly.

 

In this article, we will discuss what a contact packaging company is. We will also discuss the responsibilities that such a company can take off your plate.

 

What Is Contract Packaging?

 

Contract packaging (which may include primary packaging and secondary packaging) is when a business hires another company to manage their packaging and supply chain needs. This may include primary and secondary packaging of finished goods, point-of-purchase display builds, inventory management, and distribution to market or directly to the consumer.

 

Outsourcing your packaging operation to a contract packaging partner that specializes in supply chain management allows your business to focus on its core capabilities.

 

Contract packaging companies have the ability and expertise to fully manage all aspects of your supply chain needs. Outsourcing your packaging line allows your company to save money by negating the need to purchase lots of expensive packaging machinery and materials.

 

Additionally, contract packaging includes the purchase, optimization and implementation of the appropriate packaging machinery and materials for your products. Essentially, it is a turn-key solution to outsourcing all of these dynamics of your business.

 

 

Contract packaging companies have the resources required for the design, R&D, printing services, labor force, and fulfillment capabilities that many companies do not. Co-packers are experts in packaging. In context of a contract packaging agreement, they do several things.

 

A contract packaging company will buy all the required packaging machinery and materials required for your supply chain management. They install the machinery and the materials and train their labor force to use the machinery to package your products in the appropriate materials.

 

They optimize the machinery, materials, and labor force to continually improve upon producing quality final products and bringing them to market in the required time frame. Furthermore, they work hard to make sure your products are aesthetically pleasing and appealing to your customers.

 

Co-packers may be focused on niche markets. Markets such as food production, consumer electronics, medical devices, and OTC pharmaceutical drugs. If you are interested in the possibility of utilizing a contract packaging partner, you will want to make sure to choose the right vendor.

 

That would be a vendor who has the capabilities and expertise to manage the full gamut of packaging protocols and the machinery and materials needed to bring your product to market. You will also want to consider the co-packer's geographical location. Finally, their certifications, specialized skills, and niche market capabilities should also be considered.

 


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Why Do Business With A Co-Packer?

 

A co-packer should provide the labor force, machinery, shipping/receiving, and thought-leadership to successfully manage your supply chain needs. It is the goal of the co-packer to bring your product to market in rockstar fashion.

 

This allows you to focus on the core responsibilities of your company without having to dedicate as much time, money, and effort to how your product will be packaged and shipped.

 

There are many benefits to outsourcing your supply chain. These include cost reduction, superior packaging, and professional operation and optimization of your packaging line. Additionally, there is the added benefit of continuous improvement on your key performance indicators.

 

Who Is A Good Fit For Doing Business With A Co-Packer?

 

Running your own packaging line requires you to purchase and implement packaging machinery. You’ll also need the labor force and infrastructure required to operate it. Because of the major investment, companies that do not have the funding to manage all aspects of their own supply chain are a good fit for contract packaging.

 

On the other hand, some companies are currently running their own packaging line and supply chain. These companies may wish to outsource both their packaging line and supply chain. They do this to save time and money. These companies are also a good fit for partnering with a co-packer.

 

Who Is Not A Good Fit For Doing Business With A Co-Packer?

 

Let’s say you’re currently managing your own supply chain very well. You can easily manage your labor force, machinery, and materials. In this case, you likely don’t require a co-packer.

 

You’d be able to make this determination by analyzing your current supply chain infrastructure. If you can identify cost and time savings through a partnership with a co-packer, it might be a good idea. If not, you will most likely not find value in doing business with a co-packer.

 

How To Begin A Relationship With A Contract Packaging Company

 

Are you are interested in outsourcing your supply chain needs to a contract packaging company? If so, you will want to research a few vendors who offer these services. It would be well advised to choose a co-packer who is close to your geographical location.

 

This will ensure the shortest lead times for materials and the lowest downtime for repairs. It will also make for general ease of doing business.


Have a representative come out from each company you’re considering to look at your current packaging infrastructure. This will allow them to analyze your products, packaging line, and related items of importance.

 

You will want to get a quote from at least three or four contract packaging companies. Next, you will want to compare each offer. Identify which vendor meets all your needs and budgetary requirements. After that, you can reach out to their representatives. Finally, request a meeting to begin the purchasing process.

 

If you are not sure where to begin, check out this article on outsourcing your supply chain. It should answer many of your questions. If you would like to speak with a packaging professional directly to discuss these items further, please contact us.

 

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About Nathan Dube

As the Digital Marketing Specialist at Industrial Packaging, I am honored to create content for such a phenomenal company and work with one of the greatest teams in the Packaging Industry. Whether creating a video, writing blog posts or generating other pieces of content and multimedia, I am always excited to help educate and inspire our prospects and clients to reach their highest potential in regards to their packaging processes and needs.