Co-packing Companies: Strategies for Selecting a Provider

Co-packing, or contract packing,  is a key strategy used primarily by manufacturers to outsource the packaging process to a third party, thereby saving costs.

We provide a variety of co-packing services to Fortune 500 companies such as the Ardagh Group at our 1,100,000-square-foot facility in Fairfield, California. 

Based on our experience, this guide details a comprehensive strategy for evaluating co-packing providers. 

What is Co-Packing in Logistics?

Co-packing services can include a variety of tasks for the client outsourcing this task. It includes the following services:

1. Assembly: Putting together various components to create a finished product. An example of this is the Starbucks retail displays we build at our Springfield, Missouri, location.
2. Packaging: Placing products into final packaging, such as boxes, bottles, or bags. This is the service we provide for Ardagh Group in Fairfield, California, shipping prepared boxes and their branded bottles to nearby wineries. 
3. Labeling: Applying labels to the packaging, which may include barcodes, nutritional information, or branding. This is an everyday task for our retail logistics and consolidation services
4. Kitting: Combining multiple products into a single package, often for promotional or convenience purposes. A common use case is for Amazon FBA prep work, which we conduct out of our Sturtevant location for some of our e-commerce brands.
5. Quality Control: Ensuring that all packaged products meet certain quality standards. Sometimes, we receive requests from our clients such as PepsiCo to inspect finished goods for any deformities in the bottle. 
6. Shipping Preparation: Preparing the products for shipment, including palletizing and wrapping.

Co-packing is one of Buske’s value-added services, which includes managing manufacturing processes and assembly lines. Buske's expertise covers many Fortune 100 company partners, including PepsiCo, Coca-Cola, and Molson Coors.

Buske’s co-packing solutions also include efficiently coordinating production plans, ensuring its partners comply with regulations, and meeting forecast schedules.

Important Factors When Evaluating a Co-Packer

Selecting a co-packing provider is not the easiest task. Based on our experience and the questions asked, here are the key factors to consider:

1. Experience and Expertise: Does the co-packer have previous experience to do the job?
2. Capacity and Scalability: Can they handle the volumes required in the identified time frame?
3. Quality Control: Do they have quality control processes in place given that typically there will be humans involved in handling the product?
4. Location: If a co-packer is far away from the required location of the job, it does not make sense.
5. Reputation and References: References from credible companies go a long way in how they will work with you.
6. Cost and Pricing Structure: Is their pricing structure transparent and competitive to the marketplace
7. Flexibility and Customization: Co-packing projects are never the same. Can they adapt to your demands and create a process to ensure it’s executed every time?
8. Compliance and Certifications: Lastly, do they abide by certifications such as food-grade standards that ensure your product is compliant with your customers at all times? 

Key Strategies for Co-Packing

Apart from sharing resources, here are some key strategies to execute a co-packing strategy in logistics:

1. Collaborative Planning: Regular weekly meetings are vital copacking strategies. This should involve stakeholders — clients, suppliers, and logistics providers — to efficiently identify potential bottlenecks and optimize resource allocation. A strategy we use at Buske is establishing key performance metrics in regard to production numbers. The question we try to answer every week is: Did we produce or execute what we planned to do?

2. Technology Integration: Companies can benefit from co-packing, especially with partners that utilize cutting-edge software platforms for inventory management, scheduling, and real-time updates. Buske utilizes sophisticated Supply and Demand Forecasting to assist our clients in communication with their customers. The benefit may seem one-way but it helps us plan our labor schedules more efficiently and thus be more competitive in the market. 

3. Feedback Mechanisms: We have incorporated a form of a system called a Daily Management System (DMS) by Milliken that our executives used at PepsiCo. This feedback mechanism ensures maintenance and best practices are being discussed and expanded from the front lines. 

Benefits of Co-Packing in Logistics

To appreciate the value of co-packing, here are some ways on how it can benefit companies:

Enhanced Efficiency and Flexibility

3PLs share their resources, technology, and expertise with co-packing partners. Combined with joint planning and real-time communication, companies can quickly make decisions and well-coordinated actions. This results in fewer delays in the flow of goods within the supply chain. 

Additionally, this allows for greater flexibility in logistics operations. For instance, Buske Logistics helps clients like Anheuser-Busch and Molson Coors remain agile with co-packing solutions. With co-packing solutions, companies can quickly adapt to changes in demand, market conditions, or unforeseen disruptions, ensuring seamless and efficient logistics.

Cost Savings

Shared resources and expertise are vital elements of co-packing. A strategic co-packing partnership frees companies from making huge (and permanent) investments in machinery.

With a reliable 3PL provider like Buske, co-packing can yield substantial cost savings without compromising supply chain management.

Better Risk Management

An excellent copacking strategy gives businesses and 3PLs a more holistic view of the supply chain.

Transparency in sharing information and joint problem-solving allows partners to identify and mitigate risks proactively. Ultimately, this approach reduces the likelihood of disruptions in the supply chain operation.

This is backed by 2021 research, which noted that collaboration within supply chains can mitigate supply and demand uncertainties. It could also help reduce costs while improving profits for manufacturers.

Improved Service Quality

Enhancing overall customer satisfaction is one of the ultimate goals in partnering with a 3PL.

With the collaborative nature of co-packing, businesses can expect real-time updates and effective communication from their 3PL provider. This also allows companies to focus more on meeting customer needs and ensuring high service standards.

Competitive Advantage

The combined benefits of efficiency, cost savings, and improved service quality enable companies to outperform competitors. By adopting co-packing in logistics, businesses can gain a significant competitive advantage to enhance brand reputation and customer loyalty.

Frequently Asked Questions

What’s the difference between co-creation and co-packing?

While both are concepts of partnership, there is a distinct difference between co-creation and co-packing. In co-creation, a partnership is established by having two or more companies work together to create a specific product or service.

Conversely, co-packing refers to collaborative efforts in managing specific processes and operations. For instance, a logistics company works with a logistics provider to manage supply chain activities, optimize operations, and achieve mutual goals.

How can businesses ensure secure data sharing in co-packing?

Businesses should opt for 3PL providers that use encrypted communication channels and secure software platforms. This helps establish clear data-sharing agreements emphasizing maintaining confidentiality and protecting sensitive information.

What types of businesses can benefit from co-packing in logistics?

Co-packing can benefit businesses from various industries, including retail, e-commerce, food, beverage, and healthcare.

Companies in these sectors typically handle large volumes of goods that require meticulous inventory management, timely order fulfillment and deliveries, and specific warehousing solutions.

Embracing Co-packing to Revolutionize Logistics Operations

Co-packing in logistics offers a transformative approach to various logistics and supply chain management aspects. Committing to co-packing as a long-term business strategy enhances operational performance and builds stronger, more resilient partnerships.

Contact Buske now and learn how co-packing strategies and tailored logistics solutions can help your business achieve greater success.