You may have a decision to make about packaging: do you set up a new packaging line in-house, or look for qualified assistance from a third party? Keep your options open until you know what contract packing services are all about and have to offer.

In this article, we’ll help you get a better understanding of just how broad the capabilities of contract packaging are, and whether the service is a good fit for your business.

Why Consider Using Contract Packaging Services?

Contract packaging, also called co-packing, can be a viable alternative to trying to manage all facets of packaging and storage of your products exclusively on your own.

The challenge of trying to calculate the potential expense potential of the labor and space required to do your packaging in-house is significant. Plus there’s the additional facet of warehousing and its management to consider.

By offloading a section of your supply chain, for example to a 3PL provider who offers co-packing as a value added service, a significant portion of your company’s resources may be freed up to go towards other prioritized growth plans.

There are many benefits to outsourcing elements of your supply chain. You can realize cost reductions, superior packaging results, thorough optimization and professional management of your packaging line.

What are Contract Packaging Services?

Contract packing services are outsourced agreements with third parties that businesses can take advantage of when their own resources for in-house packaging are not fully available.

Some third party businesses offer professional packaging service as their core competency, other providers offer contract packaging and co-packing as additional, value-added services designed to help their clients manage more aspects of their supply chains.

In terms of the actual physical parts of packaging, there are typically two elements that need to be addressed to provide a suitable container for a given product. Namely, primary and secondary packaging.

Primary packing is the container that immediately surrounds the product, whereas the secondary packaging encompasses the primary package.

A robust contract packaging service provider will be able to supply these components, plus be able to label and prepare them for shipping in accordance of their type and destination.

How Does Contract Packaging and Co-Packing Work?

Contract packaging works through supplying all the services and materials related to packaging needs. This includes the purchase, optimization and implementation of the packaging machinery and appropriate materials for your products. In effect, it’s essentially a turn-key solution for outsourcing all the required packaging systems of your business.

Additionally, contract packaging companies can supply the R&D services, packaging design, printing, labour, and complete fulfillment capabilities that many companies don’t have the resources for. In fact, co-packers are often experts in all facets of packaging and related services.

Types of Contract and Co-Packing Services

Contract and co-packaging services can accommodate virtually all types of goods from everyday products to specialty items. The only real limitation is finding the appropriate company that can provide the type of service you specifically need.

For example, if your company produces goods that require refrigeration, you want to make sure you contracted service provider has the capabilities and warehousing to accommodate your products at the temperatures they require. Likewise, if you deal in food items, you’ll want to make absolutely sure your co-packer’s facilities are SQF or HACCP compliant and certified.

Additionally, packaging services can be highly specific to a type of product category, for example – cosmetics. The cosmetics industry would require packaging for such items as lipsticks, lip balms, lip gloss, eyeliners, eye shadows, eyelashes, foundations, mascara, pressed blushes, makeup primers, and brushes.

Examples of Local Contract Packaging Services

The following examples of packaging and co-packing services was gleaned from Thomas:

• Blister and clamshell packaging
• Club and multi-packaging
• Display assembly
• Flow wrapping
• Fulfillment services
• Labeling
• Poly bundling
• Kitting services
• Print bindery
• Club pack packaging
• Shrink sleeving, and shrink wrapping
• Mil-Spec and MIL STD packaging
• Plus many more

Markets Served by Contract Packaging

Virtually every market segment employs contract packaging. Some of the more common examples would be:

• Consumer markets
• OTC (over the counter)
• OEM (original equipment manufacturers)
• Automotive
• Toys
• Military
• Personal care and cosmetics
• Pet products
• Food and beverage
• Household
• Industrial
• Marine
• Medical
• Liquor markets
• And many more

Chances are, regardless of the types of products you make and market segment you specialize in, there’s a contract packaging service provider for them.

In addition, market segments can be further stratified as municipal, government, insurance, retail and manufacturing industries.

Are You Ready for a Contract Packaging Service?

Operating your own packaging line requires the investment in labour and infrastructure, storage space and the packaging machinery itself. Due to the significant amount of investment and capital required, a company that doesn’t have the necessary funding to manage all aspects of their own supply chain is a good fit for contract packaging.

The list of KPI’s you need to consider to develop a packaging line is intimidating and should only be considered if you have a solid growth plan with a proven track record in place. Otherwise, outsourcing your packaging needs to a third party reduces risk until you have such resources available.

In some instances, a company may be at that stage of growth where it makes sense to augment their own in-house packaging capabilities and supply chain needs. By outsourcing some of these needs to packaging service providers, you can save time and money, and are potentially a good fit for partnering with a co-packer.

How to Develop a Relationship with a Contract Packaging Company

To develop a relationship with a contract packaging company, you’ll first need to research a few vendors in your area. Logistically, it makes more sense to work with a provider in your own local region. This cuts down on lead times, downtime, associated shipping costs and generally makes doing business with your chosen partner easier.

You also want to have a packaging provider’s representative come out you’re to examine the state of your current packaging infrastructure. This will give them a first-hand look at how you manage your products, existing packaging line, and peripheral items of importance.

Next, you’ll want to get a quote from each company you’re considering, at least three, compare offers, budgetary requirements and fully assess compatibility. After making an educated decision for the packaging service with the best fit, reach out to the respective representative to begin the purchasing and term agreement processes.

To see if Brimich Logistics and Packaging can assist with your contract packaging needs, contact us today to speak with a packaging professional!

Updating and repacking products that would otherwise be a loss keeps them in the supply chain as viable, valuable stock. Instead of losing profits, let’s look at how a rework warehouse can help you along.

What is a Rework Warehouse?

During their journey through the supply chain, products may need to be reconfigured to maintain value to the end user. In order to comply with a new format, suppliers or distributors contract with a rework warehouse to make sure the products conform to revised standards.

Typically offered as a value added service (VAS) to their clients, many 3PL companies have warehousing services specifically set up for the process of reworking inventory. As a form of reverse logistics, this allows suppliers the convenience of not having to re-ship merchandise and recover what would otherwise be lost profits from dead inventory.

Why the Need for Reworking?

Not all outbound inventory makes it all the way through the journey from manufacture to final destination in exactly the same format from beginning to end. As a fairly common practice, reworking products involves reconfiguring them to make them suitable for delivery to the customer should the need arise.

For example, a product may be manufactured and packaged in a foreign country, then shipped to another country for distribution and final sale but have a problem along the way. For instance, products may arrive with an issue not suitable to the country of destination – such as a manual written in the wrong language. In such cases the customer may decide to not accept delivery of the product in its current state.

At this point, your options are to either ship the products back to the country of origin thus incurring significant costs and time delays, or have the products reworked in the country where they currently reside. By utilizing a local rework warehouse or similar service, your products can be reconfigured with the required updates to ensure compliance for your end customers.

Moreover, when you scale this up to a few thousand units for a few hundred stores, the task of reworking such a large amount of freight can quickly move above and beyond your normal operational resources.

Situations Where Rework Warehouses and Companies Can Help

Bundling slow selling products.

We’ve all seen extra products added as an incentive to make a purchase: “Buy this and that, get this for free!” or something similar. When a product’s sell-through slows or isn’t selling, a common method of spurring renewed interest is to offer a new configuration or bundle them together with better selling products to drive sales.

For example, two low-selling items can be combined into a single discounted package. Or selling a previously bundled item on its own as a loss-leader. To get this new format into the market, new “special offer” or “limited edition” packaging can be created and coordinated with your 3PL partner. They in turn rework the new product configuration with its own SKU, new packaging, labelling and a new barcode.

From a logistics point of view, these individual products sometimes need to be taken out of their respective warehouse locations then combined together with the new packaging.

Previously bundled products need to be reorganized.

Sometimes normally bundled products can have faulty or flawed components. For example, let’s say you have combined products usually sold as a set of six. However, you find out two out of the set are not in sellable condition. In such cases, a rework company can reconfigure the combination into sets of four with appropriate pricing, packaging and shipping information for re-entry into the market.

Product labeling requires an update.

Periodically, manufacturers may need to update item numbers or other product information. Labels may also be misaligned or product codes may not be scanning correctly requiring relabelling. In such cases your 3PL partner can print and apply new labels, or affix new labels you supply. In other instances, ‘blocker labels’ may provide a convenient answer by covering up the old labels.

A product component needs to be replaced.

Sometimes product components, even manuals as previously mentioned, need to be replaced for one reason or another. If your product has a piece that needs replacing, the existing package needs to be opened, the new piece or part replaced, then have the contents repackaged. With the appropriate directions and replacement materials, your 3PL service provider can perform the necessary operations to prepare the product for restocking and distribution.

The package is missing a component.

If you’ve ever assembled anything from a kit, you’ve probably experienced the frustration of not having enough of the right kind or right amount of fasteners – thank you IKEA. If, as a manufacturer or supplier, you find yourself in this position whereby human error has thrown you a curve ball, you can, after determining the oversight, coordinate with your 3PL to correct the problem.

Repackaging returned products for resale.

When products get returned, they need to be sorted and inspected. The end decision being either to update them for resale or dispose of them. For those products that still carry value and can be restocked and resold, a rework warehouse carries out the necessary steps needed to get them ready to re-enter the marketplace.

Products or packaging are damaged.

Estimated at nearly 11%, damage in-transit is a predictable occurrence within the supply chain. In other words we know it’s going to happen.

For example, boxes can get wet or ripped during shipment. If the product or your product’s packaging is damaged, your 3PL’s rework warehouse can repackage your products, apply any new labeling required, and get them back out for distribution.

In Summary

Any time products or packaging need to be corrected before their final destination, suppliers and manufacturers are faced with having to make an uncomfortable decision: either write off the problem and declare a loss, or engage with a service provider that can rework the products for resale.

From a cost per unit point of view, a company that carries out a rework project for a client will charge a small amount per unit to bring them back to re-sellable condition. While the process may take anywhere from a few days to a few weeks depending on the variables, the savings to the company in terms of extra shipping costs and time spent is well worth it.

Having a 3PL provider that can inspect and repackage merchandise to go back into “good stock” for resale saves the company time and money. By employing a rework service, the burden of updating flaws, damage or complete repackaging is offloaded.

In this sense, rework warehouses and product rework companies provide a valuable service within the supply chain.

Based in Southern Ontario Canada, Brimich Logistics and Packaging is one of the most experienced product rework companies in the region. To learn more about the benefits of our rework and other value added services, contact Brimich today.