April 15, 2024
Contract Packaging

Contract Packaging: Building Brands through Flexible And Customized Production Options

What is Contract Packaging?
Contract packaging is a production and distribution model where one company (known as the contract packager handles the packaging and distribution of another company’s products. This allows brand owners to focus on product development, and sales while leaving packaging, warehousing and distribution logistics to specialized third party contractors.

Benefits of Outsourcing Packaging
By outsourcing packaging to a contract packager, brand owners can achieve significant cost savings, gain flexibility and access specialized equipment without large capital expenditure. Contract packagers are able to achieve economies of scale benefits by running high volume packaging lines for multiple clients simultaneously. The other major benefits include:

Access to advanced packaging equipment – Contract packagers invest heavily in state-of-the-art, automated packaging equipment which may not be feasible for smaller brands. This provides access to creative packaging options at affordable costs.

Scalability – Contract Packaging allows for rapid scaling up or down of production based on sales without long term equipment or facility commitments. Production can be easily increased or decreased based on demand fluctuations.

Flexibility in packaging formats -Contract packagers have the ability to quickly switch between various package types, sizes, designs etc. based on customer needs. This allows brands flexibility to test new package formats, features or comply with changing regulations.

Focus on core business – Brand owners can focus energy and resources on product innovation, and sales activities rather than get bogged down by operational challenges of packaging, warehousing etc. This improves efficiency.

Risk mitigation – Contract packaging shifts the risks associated with volatile commodity costs, unexpected demand fluctuations etc. to the packager. This provides stability to brand owners.

Cost Savings through Specialization – Contract packagers gain peerless expertise through long years of experience handling diverse client projects. This achieves economies through dedicated resources and optimized processes. The savings are passed on to customers.

Key Factors When Choosing A Contract Packager
While Contract Packaging provides strategic advantages, choosing the wrong partner can compromise quality, efficiency or deliver late/damaged products. Key criteria for selection include:

– Production capacity and capabilities: Consider current and future projected volumes to ensure the packager’s line speeds and equipment can handle requirements. Inspect facilities.

– Package design experience: Check portfolio of package types created for other brands and ability to quickly iterate designs certified for safety and regulatory compliance.

– Quality and compliance systems: Auditing, record keeping, batch traceability, material handling/storage SOPs must meet stringent standards to assure product quality and safety.

– Warehousing and distribution experience: Evaluate storage space, order fulfillment speeds, transportation partnerships, tracking technologies etc. Cold chain products require special expertise.

– Financial stability: Large capital investments are common in packaging operations. Choosing a well capitalized packager mitigates project disruption risks from unexpected situations.

– Client referral feedback: Speaking to existing customers, checking case studies and audit reports are important to understand pain points, solutions provided and overall service quality.

– Pricing transparency: Competitive rates for upfront services and ongoing per unit rates based on volume tiers. Negotiate clearly defined fee schedules to avoid unwelcome surprises down the line.

– Commitment to continuous improvement: Partner orientation towards investments in automation, sustainability initiatives and operational enhancement programs ensure long term collaboration potential.

Choosing the right contract packaging partner lays the groundwork for seamless production scale up and successful brand growth. With a strategic, long term view, both the brand owner and partner gain tremendously through this collaborative outsourcing model.

Value-Added Services by Top Contract Packagers
Beyond core packaging competencies, leading contract packagers also offer a wide range of value added services to enhance client experience and brand proposition:

Packaging design and prototyping: In-house graphic designers and model shops develop prototypes for validation of design, functionality and regulatory compliance before bulk production.

Assembly/kitting: Products are assembled, secondary/display packaging developed and multi part kits prepared for just in time fulfillment of customer orders.

E-commerce optimization: Packages can be optimized for online shopping conditions with tamper evident seals, reinforced casing, easy to use graphics etc.

Custom labeling/serialization: Variable printing capabilities allow key product/batch identifiers, barcodes to trace product through the supply chain.

Cold chain support: Precise temperature control during warehousing, transportation stages maintained through skilled handling and high tech infrastructure.

Support: Point of sale displays, samples for trade shows packaging are created leveraging design expertise for next level brand building.

Storage & fulfillment: Inventory warehousing, palletization, order picking automation streamlined for easy inventory management and fast order turnarounds.

Quality management: Stringent calibration, change management protocols and ISO certifications guarantee product quality and safety compliance every production cycle.

Sustainability initiatives: Use of recyclable/compostable materials, lean production practices, energy/waste reduction goals continuously optimized.

By deploying a fully-integrated suite of services complementing core packaging competencies, contract packagers enhance the brand experience and ease of partnerships significantly. This helps entrust them with growing responsibility and business share over the long term.

*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it