Management of components and packagings in co-packing

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The growing competition of the market economy forces manufacturers to be active in direct support of sales, at the level of presentation of sold goods, product prices and their promotion. High seasonality and variability of promotional campaigns and the necessity of cooperation between many entities which organize them (manufacturer's sales and marketing, buyers of retail chains, providers of components, transport and warehousing services, etc.) make the co-packing services more and more focused on improving product efficiency and costs.

What does it mean for the Customer? The best way to explain this is to show what he has to deal with when using traditional co-packing and what happens when he outsources the comprehensive service of management of components and packagings.

 

CLASSIC CO-PACKING

The classic co-packing service is based on co-packing the elements provided by the Customer (products, packagings, labels, holders, boxes, etc.) according to his concept. The outsourcer orders all the components and makes sure that they are delivered on time for co-packing.

In this model Customers must deal with planning the co-packing, selecting packagings, graphics, and they also have to coordinate the process of delivering packagings and components so as not to disrupt the schedule of promotion. The wider the assortment of components, the more difficult the intermediary's role.

 

MANAGEMENT OF PACKAGINGS AND COMPONENTS

It is not surprising therefore, that Customers more and more often are looking for solutions based on component management offered directly by the provider of co-packing services. In this way the scope of services connected with co-packing goods is becoming wider, thus streamlining the whole process:

1)      Even before the co-packing order is placed, the Customer receives information which solutions will be most optimal for him in terms of time and costs. Apparently it is not the price of the component that matters most at this stage but the technology of its later application.

2)      The provider offers the quote including all the elements of production, components and logistics.  He coordinates the whole process - orders appropriate packagings, manages production so as to keep the agreed deadlines in case of problems. 

 

In this situation, apart from consulting, the provider assumes the responsibility for stock levels of all elements necessary for executing orders on time, both for long-term campaigns and for seasonal promotions.

WHY THE OPERATOR SHOULD BE A PART OF PRODUCT MANUFACTURING

This solution offers many advantages:

  • Handling many orders, the operator has and develops a team of experts who work for Customers from various sectors. They gain unique competences. Not only do they know which solutions will be optimal from the point of view of production, logistics and transport, but they are also familiar with the requirements of retail chains.
  • Using the economies of scale, the operator is able to have better prices for packagings or labels, even for small batches of promotional sets.
  • There is no question of dispersing responsibility. The logistics operator ensures the availability of necessary elements (he orders packagings, labels), replenishes stocks so as to avoid downtime.
  • The outsourcer of component management is able to focus on planning the availability of the product and developing sales.

All these elements influence lowering the costs of ready sets (thanks to the optimisation of the whole process) and increasing their quality (e.g. by selecting better packagings).

 

WHERE TO START?

In the last 15 years when we have been offering the co-packing service, we were able to work out methods of operations which allow for adjusting the process of producing promotional sets to Customers from many different sectors. Starting cooperation in components and packagings is a multi-stage process. First we take over the contacts with the existing providers of the Customer. Only later we analyse their offer and look for optimization. This can guarantee the continuation of the existing processes and maintaining their fluidity. 

24.03.2016
Łukasz Dubina

Łukasz Dubina

VAS Manager

Graduate of the Warsaw School of Economics. Connected with the logistics sector for 15 years. Has extensive experience in logistics and manufacturing solutions. Responsible for co-packing and co-manufacturing in Raben Group.

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