Since retailers are pushing back more and more on price, smart CPGs are starting to inquire about ways to reduce their co-packing or repacking fees. With our decades of collective experience, we’ve identified 7 pro tips to help.
- Let Us Help You With Design –
By getting us involved early in the design process, we’re able to offer improvements in the product packaging design that can reduce co-packing levels of effort or even eliminate steps altogether. It can be amazing to see how costs can fluctuate based on arbitrary requests that are not a value-add to transporting the product or enhancing the consumer experience. For example, we’ve been able to suggest improvements to pallet stacking patterns to get the most out of the pallet and reduce freight costs. Let’s identify and eliminate non-value-add components.
- Optimize Sites –
We’re very accustomed to our customers shifting volumes from one of our co-packing facilities to another or using multiple sites simultaneously. Sources of incoming inventory can fluctuate, and different parts of our country respond to product launches differently. For example, we recently shifted one of our customer’s particular projects from Tampa to Winston-Salem, as the incoming materials were coming into the SC ports and outgoing finished goods needed to be shipped to DCs up and down the East Coast. That shift saved shipping costs. What’s your optimal location, and how might that shift over time? Given today’s supply chains and finicky consumers, the answer to that question will likely shift over time. So, it helps to stay flexible and work with your co-packer to constantly adapt
- Fully Define the Needs –
Most experienced co-packers will offer unit-based pricing. This helps our customers track packaging costs against production volumes, while facilitating better budgeting, financial planning and risk reduction. However, establishing an accurate price requires that we know the scope as thoroughly as possible during the quoting process. Unknowns are usually quoted high. As general guideline, the more our customers can share about their project, the tighter our estimate and the sharper our pencils will be.
- Stay Within the Scope –
We have seen several customers change aspects of their product in the midst of our co-packing run. Making simple changes, such as updating a label, is totally fine and understandable. However, when a change requires that we redo any work or stop for reapprovals, we will most often need to charge a premium. It’s best that we lock everything down and agree on all aspects of the first article before we start ramping up a production line.
- Bulk Pack Raw Materials When Possible –
The less the co-packer has to “unpack” to get to needed goods, the better. Not only does this help reduce waste and help the environment, but it also reduces the work needed in the co-packing operation. For example, we’re talking with beverage customers about not bundle wrapping inbound product so we do not have to remove the single flavor bundle wrap to get into multipacks. We’re also talking with another customer about bulk packing their bottles into large cartons that we can access, versus us opening multiple small unit cases just to get the bottles online. Bulk packing can reduce our effort and your price.
- Allow for Steady Runs –
We often run multiple production lines for customers who are in a hurry to get their products packaged and ready for a retail launch. With today’s supply chain disruptions and agile needs for product demand, we’re certainly very accustomed to that kind of surge work. However, if we’re able to map out a production schedule and feed in the inventory such that we can use fewer lines, each with steady production over a week or two (versus a few days), we are able to reduce learning curves, along with set-up and clearance times. In addition, we’re able to dial-in or optimize our lines to maximize efficiency. In doing so, we’re able to reduce our cost by as much as 20%, which translates to reduced pricing.
- Help Us Manage Inventory Levels –
With any co-packer or 3PL, storage costs are either explicitly stated as part of the price (in and out fees, plus storage) or are embedded in the price. In either scenario, the price of storage and handling is not free. When we’re able to work with our customers to feed our co-packing lines with inventory and retrieve finished goods soon after they have been repacked, we’re usually able to reduce the overall fees charged, either directly or indirectly.