Long gone are the days when consumer packaged goods (CPG) companies worked purely transactionally and short-term with contract packagers and manufacturers. Market shifts are transforming the CPG/supplier relationship to be one that’s more strategic and collaborative.
And that means the way you select your co-pack partners has to be transformed as well. Whether you’re evaluating your existing co-pack supplier, or you’re gauging a potential partnership with a new supplier, the following will give you insights into what to look for to find the best co-packer for your needs.
Flexibility has always been a key factor in selecting a co-pack partner. You want a partner that can support the fluctuations of your market demand. This means that they must be flexible enough to handle customized requirements, and responsive enough to deliver quick turnaround times.
To compete we need a structure that allows us to move quickly and experiment. This means having the ability to try something new in the marketplace […]. When suppliers are willing to provide this flexibility, it can be powerful.
Finding a production execution partner that has a track record of delivering “on time, in full” (OTIF), even with minimal lead time, capacity surges, and short-run jobs is key to your ability to reliably deliver to your retail customers.
2. QUALITY CONTROL
Quality in manufacturing and packaging is quickly becoming a “nowhere to run, nowhere to hide” space. Your co-pack partner should be able to handle the increased regulatory burden that you face, and demonstrate understanding and compliance with the regulatory requirements in your industry.
The Food Safety Modernization Act (FSMA) requires us to increase tracking and documentation in our supply chain. Also, previously the FDA could suggest a recall; FSMA gives them recall privileges. It is a very big change in total regulation for us.
As the regulatory environment continues to intensify, traditional (manual) methods of track and trace are no longer found acceptable. In evaluating your co-pack supplier, look into these aspects of their safety and quality assurance:
Certifications and results from previous SQF, GMP or FDA audits
Investment in technologies that allow them to map your products across the supply chain
Level of knowledge about regulatory standards, and ability to interpret ambiguity in the regulations guidelines
We live in a world of networked manufacturing, and best-in-class suppliers no longer operate in their own silos. Your co-packer should understand that to truly empower their own suppliers and customers to be responsive, they have to be connected and integrated.
Look for a co-packer that is able to integrate their contract packaging system with your ERP system and with your logistics partner’s WMS system so that all stakeholders can use data flow to drive better communication, coordination and control in the supply chain.
4. INVENTORY ACCURACY & REAL-TIME VISIBILITY
Good inventory control is one of the most core and basic things you should look for in your suppliers. Why? Inventory accuracy demonstrates that your co-packer has good control over the movement and consumption of items on their shop floor, and is a leading indicator that they’ll be able to complete orders. When evaluating your co-packer’s level of inventory control, consider:
Are they reporting the right numbers of what they’ve received, used, and shipped out?
Do they have an integrated system for real-time inventory reporting, or is it manual?
What is their track record for accuracy of meeting orders, on time in full?
Overall, inventory accuracy is a good indicator that your co-packer has the systems and processes in place to manage a disciplined operation, giving you confidence in being able to deliver to your own customers reliably.
5. PHILOSOPHY OF CONTINUOUS IMPROVEMENT
Best-in-class suppliers not only do what they do well, they do it better each day. Your co-pack partner should demonstrate a philosophy of continuous improvement in their commitment to serve you better. To gauge whether they truly embrace a culture of continuous improvement, look at whether they’ve undertaken initiatives to:
Uncover opportunities to improve their cost-to-quality ratio for customers
Benchmark themselves against past project performance and identifying bottlenecks
Track tack times for assembly steps in order to optimize the line setup for maximum efficiency
Global CPG leaders are increasingly partnering with co-pack suppliers that have the same appetite for collaboration, innovation and excellence that they do.
A strong co-pack partner should be able to deliver high accuracy in inventory control, flexibility in handling demand fluctuations, and strong understanding of regulatory requirements in your industry. Your co-packer should also be able to demonstrate transparency and commitment to your business by directly integrating their systems with yours. Lastly, you want to entrust your production capabilities to a supplier that has a philosophy of continuous improvement, so that as your business grows and evolves, they’ll always be able to scale to your needs.
Learn how to strengthen your position with CPGs
Scott has over 10 years experience dealing with complex software solutions for some of the worlds most recognizable brands. As business line manager at Nulogy, he is responsible for overseeing all product offerings for large multi-channel CPG brands to increase growth within one of the largest global supply chain markets.