Top 5 Considerations When Choosing a Contract Packaging Company

For the last 2 decades with increasing popularity, outsourcing of packaging services has become commonplace in almost every industry.  Whether you are a start-up company or a Fortune 100 Consumer Packaged Goods (CPG) company, there are several key factors you should consider when vetting the right contract packaging partner for your project.

The contract packaging industry supports a broad range of services and capabilities and finding the perfect one for your specific program takes a commitment to find the most trusted and capable partner.  The categories of services can be broken down into sub-groups.  These would include: primary and secondary packaging, food and non-food filling, and liquid and dry ingredient packaging.

The contract packaging supplier landscape is diverse with specialists operating in each area.  Contract Packaging Companies, or “Copackers” vary in size, flexibility, machinery, management style, quality, run size, geography, capability and pricing.  It will ultimately be up to you to determine your priorities for your packaging project and then determine the best fit for the outsourcing of your product based on these tangible and intangible qualities.  Your goal is to ensure your supplier possesses the qualifications, certifications, production capabilities, communication and attention to detail required to ensure that your packaging project is a success.

There are always exceptions, but the priorities listed below, in order of significance, should hold true for nearly every contract packaging project – regardless of its scope or size. The best providers should be prepared to adequately address each of these packaging concerns:

#1 – Resourcefulness

Confidence comes with assurances your packaging partner is a problem solver and innovator as well as a competent co-packing practitioner.  Determine whether your outsource partner is resourceful in these other areas.  Even if you don’t plan on using them for these services, by knowing and understanding them you can at least be assured that they are an experienced partner who will be looking beyond only the tolling (Labor) part of the job.

  • Can your conpacker give you package design support?
  • Can your copacker help you with sourcing or procuring raw materials or at least refer you to their network of providers?
  • Does your partner have an expertise in flexible film structures, pallet optimization, Big-Box/retail store requirements or third-party logistics services?

Seeking out a “turnkey” contract packaging company will ensure they come with experience managing projects, including comprehensive understanding of the supply chain, material selection, pack out and ultimately getting the most return at each stage of the packaging process.  As the packaging industry gets more complicated with mandated certifications and governance, it is best to work with a full turnkey specialist who fully understands every phase of the process from “cradle to grave”.

#2 – Capability

While it may seem obvious that the packaging company you have considering will need to maintain the machinery, personnel and workspace required to complete your order, these things should not be taken for granted.  It is not unreasonable for you to ask a contractor what equipment would be used for your project and request a physical walk-through of the proposed production line so you also get educated on the critical parameters of the job so you are all on the same page.  Your commitment to a particular contract packaging company should not be given until you are convinced they possess the capability and capacity to handle your program timely and efficiently.  Ask important questions.  Ask what could go wrong in their process and what they would do to overcome the problem.  Make sure the scope of your project falls within the provider’s “sweet spot” reflecting core competencies of the operation rather than something that is new and unfamiliar.  For additional feedback, request references from your copacker or go to their website to see online reviews to get a better  understanding on what to expect from this provider.

#3 – Flexibility

Changes are inevitable in the contract packaging industry and working with a “nimble” partner can help guarantee their ability to respond quickly and change course in the middle of a project.  “Last minute” changes in details can cause planning, scheduling and management conflicts that can impact timelines and worst case, line shutdowns, which can derail even the most organized operation.  Make it a priority to fully understand how the company would meet these challenges on your behalf while remaining fully vested in the complete and total success of your packaging project.

Many packaging companies will up-charge for rushed projects or for small pilot or pre-production runs. This should be expected. Stay focused on the long term benefits of the relationship versus the short term costs of smaller runs.  Look for a “whatever-it-takes” culture and a management style that cares about overcoming obstacles which are common in the contract packaging world.

Solid communication with your partner plant is critical.  Understand their organizational chart and who find redundancies when possible.  Lear who you can escalate a problem to, and know the quality manager and agree up front to have a direct line of communication with them, if needed.  Find your account “ambassador” and make it clear that you require them to be 100% accountable to you for your project.

#4 – Location

Being headquartered in close proximity to where your packaging project will run may seem important, but it can often be more beneficial to select a location which is closer to your supply or distribution  of raw ingredients and/or finished goods.  To optimize shipping efficiency, be sure to account for the size of the end product you will be packaging.  Most companies realize that the finished goods will cube out much greater than its individual components so be mindful of the less costly location based on total cube and final shipping routes.  For example, with smaller or “lighter” products, cross-country shipping costs might be insignificant so the most resourceful, capable, flexible and affordable co-packer may still be a valid consideration despite the greater distance.  Also, finding the perfect partner who has the other 4 attributes is much harder to find, so at the end of the day you can use technology to stay close to your project, and choose the best packaging partner based on the top 3 considerations.  Remember, on-site visits for a job start-up is always recommended and will help solidify relationships and set early expectations for the project. The cost of an airline ticket is money well spent once you realize someone is babysitting your “child”.

#5 – Affordability

Though cost furnishes an important consideration, it is not the primary factor influencing a successful packaging effort.  A rule of thumb for a retail item is to budget 10% of the total cost for packaging. Be mindful of this budget up front when selecting your materials as well as your service vendors.

Contract packaging is a “custom” business so each opportunity for a copacker comes with a unique customer personality, specific assembly instructions and random needs. The best “general contractor” is not always the one with the cheapest labor but the one with the best result.   Like building a custom home, it’s the experience of the sub-contractors, the solid communication, quick turn-around and overall efficiency that help increase profits and ultimately save you money by executing and building the “perfect house” the first time.

For complete packaging success, consider the other four factors, then negotiate your price with the contract packager that you feel is the most resourceful, capable, flexible and local solution in meeting all of your needs.

The Bottom Line

Contract Packaging Bottom LineIt is clear that your choice of contract packaging has a dramatic effect on your product’s profitability.  The right turnkey packaging expert will reduce costs and improve efficiency in every link in the supply chain.  By using the criteria outlined above to evaluate and compare your potential vendors, finding the true leaders to help guide your efforts should become clearer for you.  You need a contract packaging partner you can trust with the experience, resources, communication and ability to custom-fit your needs with a solution. If you do, your business trajectory and profit margins will be rewarded handsomely.

Are you now ready to choose your contract packager?

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