co-packing

who benefits?

Co-Manufacturers can save your brand significant money on labor, materials and other expenses related to production and overhead. As long as the company maintains appropriate oversight, contract manufacturing can permit a company to lower its production costs, maintain the quality of its production and increase its profit margins. Additionally, it provides capabilities to handle large orders as you grow.

Today, existing brands are finding more reasons to outsource their entire production to other companies – cost savings being a priority. Companies save on their costs because they do not have to pay for the facility overhead, and the equipment needed for production. They can also save on labor costs such as wages, training and benefits. For many companies, the extra savings allows them to focus more on marketing.

A mutual benefit to co-packing is setting up a contract between the manufacturer and the brand it’s producing for that may last several years. The manufacturer will know that it will have a steady flow of business within the contract terms.

What are the benefits of co-packing for bakery, beverages & food manufacturers? Greater product visibility, increased management of costs, flexibility and environmental benefits are just some of the benefits food manufacturers can derive from the process. The primary driver is managing costs, because third-party operators already have the expertise, resource and staff in place.

With co-packing, brands can take advantage of skills that they may not possess, but the contract manufacturer does. The contract manufacturer is likely to have relationships formed with raw material suppliers or methods of efficiency within their production. Contract manufacturers have their own methods of quality control in place that helps them to detect out of specification product lines early. With co-packer brands can focus on their core competencies better if they can hand off base production to an outside company.

Contract manufacturers have multiple customers that they produce for. Because they are servicing multiple brands, they can offer reduced costs in acquiring raw materials by benefiting from economies of scale. The more units there are in one shipment, the less expensive the price per unit will be.