The nature of business and manufacturing has changed significantly in the past few years, thanks to technology, scaling, and other factors. There are now almost 600,000 dedicated manufacturing companies across the United States.
But one such change in the sector that some people still don’t know about is what’s known as co-packing.
We’re going to outline what exactly co-packing means as a term. We’re also then going to go into the many benefits of co-packing services.
That way, you can consider using co-packing as a methodology at some point in the near future.
Co-packing is one of those terms that actually has several different names. You may have heard it referred to as co-manufacturing, or co-man, or even just outsourcing.
Put simply, co-packing is a method where you outsource your manufacturing and packaging to an external company. They create and package your product to your strict specifications, so you can then sell them within your respective market.
Co-packers will typically take either a one-off order fee for certain quantities or a percentage of sales for a continued order.
Co-packing, in particular, is the term often used for manufacturing and packaging food and other consumable goods. These may be IQF foods or other products. That’s where you may have heard the phrase food co-packer before.
As a system, co-packing ensures that smaller companies don’t have to dedicate large costs to establishing their own facility. Instead, they can outsource to another company in their sector or an independent facility to create products on their behalf.
There are even companies today that specialize in providing co-packing services. These are usually known as co-packing companies.
Now that you know what exactly co-packing is, let’s go into the many benefits it can provide.
These days, manufacturing is no easy feat. The costs of establishing a warehouse can become very costly, very quickly.
Companies need to find a space large enough to install all of the machinery required for large-scale production. They also need to employ enough people to manage this warehouse daily.
To build a warehouse, for instance, costs a minimum of $24,000 in America today, according to certain estimations. That figure can go up as high as $800,000 for major operations.
These are costs that a lot of smaller companies simply can’t afford to invest in.
But with co-packing, smaller businesses are provided with an easier way into the manufacturing process. They can partner with a company that has already invested in these operations.
Co-packing allows smaller companies to be able to access the manufacturing process at a fraction of the costs they would face if they were to manufacture on their own.
This is great for the sector as a whole, as it means more diverse products can make it to market. This creates diversification that can provide new and interesting products for consumers.
Co-packing is also beneficial because it’s a way for newer companies to learn from those who have been in the industry a long time. For start-ups, they’re able to see how manufacturing works without having to invest in it themselves.
This level of shared expertise can help educate companies that are just starting. It may provide sparks of creativity that cause them to create all-new products for the market.
It can also help businesses see how they can improve their own operations by working with an expert.
A co-packing partnership can help smaller businesses grow, allowing them to eventually set up their own processes in the future. It can be an educational process, as well as a leg-up for smaller and medium-sized businesses.
Even if a smaller company does decide to invest in manufacturing, they’re often limited in size and scope. This can be either due to the costs of establishing operations or their current lack of expertise.
Regardless of the reason, smaller companies end up manufacturing a limited number of products. This then reduces the amount of profitability they can make overall and hinders growth.
There are far fewer limitations when it comes to scaling when you choose to work with a co-packer. Companies offering co-packing are often longtime manufacturers with large-scale warehouses.
This means that the scope of orders for companies can increase significantly. They can potentially decide on spin-offs or new flavors of food products to be made alongside a flagship offering.
All of this ensures that they can create more products at a higher level of quality than they could otherwise.
There are a lot of legislative barriers when it comes to manufacturing in America today. These barriers are put in place to ensure the safety of employees, as well as the quality of products. Though they are necessary, it can be hard for smaller companies to meet them.
Co-packing allows smaller businesses to sell custom goods without having to worry about certifications or equipment.
With co-packing, companies can rest assured that the entity they’re contracting with has all these certifications already.
Small companies can order products without worrying about covering these certifications themselves. This is particularly important in food co-packing, where ingredients and health warnings must be followed at all times.
Companies can provide strict requirements to co-packers, who will be experienced enough to meet the demands of any order.
You should now know what exactly co-packing is, particularly food co-packing. Co-packing has four major benefits, as noted above.
It’s an affordable way to enter into manufacturing. It provides a greater level of scale and allows shared expertise to smaller companies. Finally, it means certifications and equipment are already accounted for.
If you’re interested in food co-packing, this is a service we offer here at SunLeaf. We’re a company with over 75 years of experience in the food and manufacturing sector.
To find out more about our co-packer offerings, please look at our dedicated co-packer page on our website.