What is Contract Packaging or Co-Packing?
Preparing a product for packaging is an essential final step in the manufacturing and assembly process. Some companies choose to outsource some or all of the manufacturing and packaging for their products. Contract packaging can refer to paying another company to manufacture one or more product lines, or it could involve sending finished goods to a contract packager to assemble and pack to detailed specifications. Many times, the contract packagers operate as an extension of the manufacturer, providing the expertise needed for specialized requirements.
Contract packaging allows some manufacturers to avoid the high cost of owning, operating, and maintaining specialized equipment. In turn, co-packing also provides contract packagers a way to defray some of their operating costs with a service for businesses that have similar manufacturing or packaging needs. Co-packaging requirements can vary from simple to complex, such as blister packaging, bundle wrapping, transport tray, cello wrapping, stick pack, three side seal sachets, thermoform clamshell, or even a point-of-sale display.
Co-packing is common in the food and beverage industry. For example, it is used often for large commercial bakeries that produce products labeled under other names. Operational efficiencies gained with co-packing place manufacturers at a greater competitive advantage. Outsourcing provides a way to scale quickly to fulfill large orders by leveraging another’s core competency.
Co-packing vs. Private Labeling
What exactly is the difference between co-packing and private labeling? Both services deliver a finished product with the customer’s label. However, there is a distinct difference between the two regarding ownership of the formula, production processes, and service pricing. Essentially, the differences can be described as follows:
- If the goods are manufactured to proprietary formulas or specifications provided by their customer, it is considered co-packing. The customer retains all rights to the recipe.
- If a company sources the ingredients and manufactures goods based on its own formulation but packages it under their customer’s name, it is considered private labeling. Private label products can also be developed specifically for a client. However, the customer has only purchased the service, not the rights to the formulation.
Contract Packaging Stages & Services
If your product is scalable, the demand is there, you have the capital to scale up, and you understand the co-packaging relationship, it may be time to find the co-packer that is right for you. The services offered can vary in capability and price. In general, the structure of using a contract packaging service consists of the following stages:
- Design: In-house design teams consult with the clients for customized packaging. They also create prototypes to assist with troubleshooting before production.
- Inventory management/control: This process involves receiving and auditing the items for assembly and packaging.
- Printing and component production: Customers require this service when artwork, a manual, or other components need printing before packaging.
- Plastic/thermoform packaging production: Thermoform is a heat molding process to create plastic clamshells as well as trays and other packaging.
- Package assembly & fulfillment: Package assembly can require adherence to several specifications: sequence, handling, placement, the inclusion of manuals or coupons, and finishing.
- Warehousing & distribution: Some co-packers offer this service to organize and store the finished packaged product.
While every co-packing company may not offer all these services, that may not be necessary for your business. You’ll know what services you require and can quickly narrow the list to those who offer what you need.
Choose ELIS Packaging for Your Contract Packaging
When your business requires high-quality production equipment with processes that are flexible to fit your needs, ELIS Packaging is the contract packaging company to trust. Our talented team has the expertise to offer everything from design to packaging.