How Do Co Packing Companies Benefit Retail? Should I switch?
Co Packing Companies: What They Do
Co-packing or contract packing is where a company outsources its secondary packaging to another company (contract packaging company) whose sole job is to make the product shelf-ready. By outsourcing this final packaging process, the original company leverages the efforts of the contract packaging company without adding more staff or equipment.
Packaging of consumer goods has become more demanding and complex forcing many companies to outsource this process to companies that only focus on packaging, assembly, and warehousing. In return, consumer goods companies benefit from the innovation, equipment, and manpower that these contract packaging companies provide allowing them to do much more volume efficiently.
Should You Switch To A Co-Packer
In order to decide if you’re ready to switch to a co-packer, you need to consider a few points. Here are the top questions you need to ask yourself:
- Is there a high demand for my products? This is an important indicator because moving to a co-packer means that there is high enough demand for your products that you require the scale at which co-packers operate. If the demand is only seasonal, it may be better to hire seasonal help than to move to a co-packer.
- Do I have the capital required? While co-packers are relatively cheaper compared to setting up your own operations, it will require some investment on your part to get them to do the packaging for you. You can always negotiate better terms but that happens when you have built a relationship with them. You should consider how the cost of outsourcing to a co-packer will affect your bottom line and decide if the time is right for you.
- Is my recipe scalable? If you’re dealing with food-related products, it’s important to consider how the recipe will hold up when scaled up to 5x or 10x the current production level. It may be hard to tell without doing some actual tests but this is something a co-packer may be able to help with. Before you talk to a co-packing company, it may be a good idea to go through your recipe and make sure that all the measurements are as precise as possible.
- Do I understand how this will change operations? Working with a co-packing company will mean reshuffling some of your processes to ensure that you have a smooth integration with them. Each co-packing company offers its own set of services that you will have access to but it’s important to understand what you’re paying for and what is required of you from an operations point of view.
A co-packing company can bring a lot of expertise, scale, and efficiency to your production. Deciding when to get into a relationship with a co-packing company is one of the most important decisions you’ll make as you grow your company. I’ve shared a few ideas that you can think about as you make your decision. If you’re unsure, you can always reach out to us for more clarification or suggestions.