Supply Chain 101: What is Contract Packaging?
Continuing the “Supply Chain 101” series, Nulogy VP Paul Statchuk defines contract packaging, and explains how co-packers deliver strategic value to consumer brands.
Welcome back! I am excited to continue our Supply Chain 101 series this week to focus on contract packaging and the role of contract packagers.
As a refresher: In our last blog, we defined the terms “upstream supply chain” (covering service providers such as co-packers) and “downstream supply chain” (covering post-manufacturing entities such as distributors and retailers) and explained their roles.
Without further ado, let’s dive into the world of contract packaging.
Contract packaging (or co-packing) is a category of outsourced service that provides primarily packaging services on behalf of another company. These packaging services include primary packaging (the layer of packaging that touches the physical product), as well as secondary packaging (the packaging that bundles finished goods).
What this means is that many of the consumer products you use on a daily basis are most likely fulfilled by co-packers - whether it’s soap, toothpaste, snack foods, or household cleaners; the list of products produced by contract packagers is endless.
As a result, co-packers play a critical role in consumer brands’ upstream supply chains by enabling them to innovate and deliver new products to market efficiently. Many co-packers also design and produce the packaging and conduct the assembly/kitting processes, offering additional value to consumer brand customers.
Co-packers can also offer a variety of other services, including:
The consumer goods industry categorizes co-packers by types of packaging services they offer (e.g., blister packing, cardboard, clamshell, shrink wrap, liquid bottling, sterilization) and others by industry: for example, food and beverage, cosmetics, or household products – each industry coming with its own set of regulations and compliance requirements. Co-packers also serve brands in such areas as bulk manufacturing, retail, wholesale, OEMs, industrial equipment and cargo shipping, among others.
Brands rely on contract packagers to get their products effectively and efficiently on the shelves of retailers and in front of consumers.
By contracting the services of a co-packer, a brand is able to leverage the expertise and capacity of a specialized packaging design and fulfillment business. In this way, co-packers offer efficiency and flexibility, meeting tight turnaround deadlines and demonstrating significant industry knowledge and expertise. Brands rely on contract packagers to get their products effectively and efficiently on the shelves of retailers and in front of consumers.
Co-packers are vital and strategic partners for consumer brands, helping deliver products to consumers as quickly, efficiently, and as sustainably as possible.
Given all the events of the last few years – the pandemic, the great resignation, the gray wave, and the resulting supply chain challenges – brands and co-packers need to view each other as strategic partners, now more than ever. We’ve written about this necessity for collaboration even before the current pressures and disruptions upon the supply chain.
So how can consumer brands best choose strong prospective co-packing partners? We identified how to choose the right contract packer and the five traits to look for in a best-in-class co-packer, such as:
When technologically-savvy co-packers digitize their shop floor with a multi-enterprise supply chain business network platform (MESCBN) such as Nulogy, they reap significant benefits. With data automation, they gain improved operations, increased profitability, faster reaction times to supply/demand fluctuations, and more error-free processes. By applying technology, co-packers can move staff from time-consuming manual processes to more value-added tasks, thus responding to labor constraints. Customer collaboration is likewise improved, as co-packers gain better visibility into their processes to deliver inventory accuracy, resulting in an uptick in brand customer satisfaction.
We hear it often from our customers: Nulogy’s supply chain solution has helped them address operational issues in the volatile contract packing market. Among the main benefits of technology for contract packagers are improved quality control, greater operational visibility from real-time data, and superior customer service. As Nulogy’s UK Managing Director Josephine Coombe recently wrote,
Purpose-built co-packing software can create a strong operational workflow that demonstrates to brand customers that you, as a co-packer, offer superior processes and services compared to the rest of the competition.Josephine Coombe, UK Managing Director, Nulogy
I hope today’s article gave you a better understanding of contract packagers: a valued supply chain segment that leverages specialized expertise and services to help brands get everyday products into the hands of consumers.
To learn more about digitizing the shop floor for co-packer operations, download the Nulogy Guide to Evaluating Software Solutions.