Contract Packaging 101: The Basics
In this first topic of our education series we’ll cover the complexities of Contract Packaging. You’ll learn what it is, the different reasons companies may outsource to contract packagers, the types of services they provide, typical stages of the contract packaging process.
:: Definition: What IS Contract Packaging?
Contract Packaging is a general term that defines most packaging that is done on a contract basis (on the outside and with a 3rd party supplier who has the necessary machinery and automation).
Contract Packaging, or Co-Packing, is the process of assembling a product or good into final finished packaging. It can be a simple or complex process depending upon the extent of customization specific to a product’s packaging. Packaging regulations and guidelines can vary greatly across retail, commercial or trade industries. So depending on the product, the final packaging may come in a variety of forms such as folding cartons, blister packaging, shrink wrapping, cello wrapping, sealed thermoformed/plastic clamshell, pouches or bags.
:: What 3rd Party Contract Packaging Companies Do
Contract Packaging and Co-packaging companies provide packaging services – ranging from simple to complex – to product manufacturers, often acting as an extension of the company. A simple service may be applying a promotional label or coupon to a product that is already packaged. A more complex service may include everything from start to finish… planning, designing, producing and fulfilling the entire package.
Sometimes manufacturers perform the end-of-line services of packaging a product internally due to line set-ups, government regulations, strict manufacturing requirements, environmental factors, the level of difficulty of moving it to the outside, and more. But for most retail products that are manufactured companies lean on outside Contract Packaging Companies do this final packaging work. In these cases, care must be taken to put quality and inventory control procedures into place in order to operate at the standards those manufacturers specify when they enlist contract packaging services.
While the term “Contract Packaging” applies to any 3rd party who provides the final packaging and assembly services, there are several categories of contract packagers who may either serve specific industries or provide specific capabilities based on space, certifications and equipment. For example, Outlook Group specializes in servicing companies in the medical device, pharmaceutical and personal care markets.
Some contract packagers specialize in liquid filling, some in shrink wrapping, and some in blister sealing. Some utilize manual machinery while others have invested in high speed automatic equipment. Some contract packagers have a small building in a single location and others have multiple warehouse and production facilities across the nation.
:: Reasons Companies Use Contract Packagers/Co-Packers
Bottom line: Contract packaging companies do what product manufacturers don’t want, or are unable, to do themselves. Following are the main areas that product manufacturers rely on contract packagers to solve.
- Contract packagers provide the labor, equipment, location, and knowledge to create or assemble the very best package for the manufacturer’s product.
- Product packaging fulfillment is typically short-term and medium to high-volume in nature, which presents challenges in finding and coordinating temporary staffing. Examples can include:
- Promotional packaging (2-for-1 promotions, bundling two different products together, free sample with a purchase, etc.) are also short term and on an “as needed” basis.
- Un-Bundling/Packaging of product to repack into new or different packaging
- Often times specialty equipment is needed in order to completely package a product.
- Contract packaging companies have experts on-staff specialized at handling varying levels of the contract packaging sequence.
- They also have many in-house resources or outside partners to respond to specific product packaging needs in a timely manner.
Ultimately, these capabilities give product manufacturers flexibility in defining the packaging process based on the needs of the product.
:: The Main Categories of Contract Packaging Solutions
Before outsourcing a packaging project with a contract packager, you should familiarize yourself with the main categories of contract packaging services available:
- Primary packaging – direct contact is made with powder or liquid as it is being packaged.
- Secondary packaging – final assembly or packaging a product that has already been primary packaged. Examples include Bag-in-box and Bundle wrapping.
- Hand Assembly – manual assembly including kits, gift sets, POP displays, gluing, tipping, folding, repackaging, and fulfillment.
- Contract filling – pouching, blending, bottle and tube filling, bagging, filling.
- Rigid bottle filling – filling a rigid container with a powder, solid or liquid, then capping, lot coding and pack out.
- 3rd Party Logistics – warehousing, drop ship, reverse logistics, bulk logistics, pick & pack.
- Turnkey Product Packager – a contract packaging supplier that will manage the complete material supply chain.
- Co-packer – implies some level of contract manufacturing along with primary and/or secondary packaging capabilities.
:: Stages of the Contract Packaging Process
There are varying degrees of contract packaging services, which can be utilized independently or bundled according to the product’s overall scope and product development. Contract packaging companies work with product managers and manufacturers to consult, plan, customize and execute the process according to the timeline, pre-produced or need-to-be produced packaging components and industry requirements. Generally, the steps of the contract packaging process include:
- Design: an in-house design team helps to design the final product packaging, allowing for trouble shooting with prototypes along the way and ensure products best fit the packaging and maximize production time.
- Inventory Management and Control: Receiving and auditing inventory of the product and pre-produced packaging components (e.g. packaging, manuals, inserts, card stock, promo stickers).
- Printing and Component Production: Sometimes the package itself needs to be produced (folding carton, flexible packaging, shrink sleeves), or a card with artwork or a manual may need to be included, which needs to be printed before inserted into a final package.
- Plastic or Thermoform Packaging Production: Manufacturing of packaging, which can include the production of plastic/thermoformed packaging: clamshells, blisters, trays and more.
- Package Assembly and Fulfillment: Carefully execute product fulfillment into the packaging. This often requires a defined sequence with careful handling of the product, accuracy of placement into the packaging, inclusion of any other required items, such as manuals, coupons, and product finishing – closing, sealing, sticker placement, or other.
- Warehousing and Distribution: Organizing and storing/housing the packaged product.
No matter what scope of product packaging a product manufacturer or product manager has, simple or complex, a good contract packaging service provider will be with you every step of the way to ensure the product is delivered on time every time.
:: More Learning
Want more Contract packaging education? Drop us a line and let us know what specific educational topics you’d like to see added.