During my career, I have worked with and as a contract manufacturer (also known as a co-packer). Contract manufacturers are used for many reasons: your current capacity is not enough to keep up with demand; one company has a unique patented process or package; you do not have the proper tools to make a specific product; you want to create product variations for a test; or you want to produce unique, trendy products without the capital equipment investment.
There are many articles on the subject of co-packer selection and quality. Let’s assume you have already personally screened, selected, and signed on to a co-packer relationship. Your staff in quality, procurement, and possibly product development have been involved in building the relationship. But sometimes it’s the simplest things that keep the relationship positive over time. What follows are my personal observations and lessons learned while working with or as a contract manufacturer.
Be present, vigilant and observant
Consider preventive testing of raw materials. I encountered an issue where a raw material was contaminated with plastic shreds – the ingredient was apple fiber and the manufacturer had used retail apples to produce it, leaving the stickers on the apples. We rejected two truckloads of finished product due to this plastic contamination. If the material had been tested prior to production, we may have been able to prevent this issue. Admittedly, this testing time may have limited our production window, but knowing the results ahead of time would have prevented lost production.
While on site and in production, strive to include the production staff that runs the equipment every day in meetings and learn their insights on making the product more efficient. They know the intricacies of the products that run best on their equipment and they typically have insights on improving your production. Ask open-ended questions to your operators, packaging staff and mixers – most of these employees are not included in discussions and are surprised that their input is valuable.
In one instance, a piece of our proprietary equipment was being used to produce a competitor’s product – the specific equipment had been used before our arrival and was not ready for our production. Use of this equipment was written into the contract, so this was not appropriate on the part of the manufacturer. This led to intense discussion, lawsuits, and eventually dissolution of the relationship. If we hadn’t been present, we would not have found this issue.
Specifications and processes should be clear
Have you fully tested your product for your tolerances, especially in real life settings? I had one restaurant chain that changed their specifications as often as we ran their product, and these changes were due to supply issues with another component on the sandwich, which made their bun so soggy that consumers were flipping over the sandwich to eat it. The bun slice thickness went up and down as they continued to attempt melding all components into the ideal product, but the consumers were the ones who were experiencing the changes and seeing an inconsistent product. This was detrimental to repeat sales. Lesson learned: make sure your specifications are proper over the duration of the shelf life and in the proper end-use situation.
In another case, an outside development firm created a baked product for a customer using kitchen methods without learning how it translated to production. They came in with firm expectations on dough moisture, mix times, and bake times, not recognizing that the transition from kitchen to production would cause changes, and they were very determined to stay with their original plans. Ultimately, the plans had to change to accommodate the production requirements, and no negative effects were produced.
Co-packers are partners
The co-packer relationship should be proactive. Feedback, both positive and negative, should be shared on a regular basis. Any results of your analysis should be shared with your co-packer, as well as any long-term and short-term forecasting, contingency plans for cost reduction, and consumer complaints.
Don’t make your lack of planning a contract manufacturer’s crisis. Rather, share promotional windows, and warn them when you see spikes in sales. Tracking metrics should be determined for both the co-packer and the contractor, and active involvement in reviewing these metrics should occur regularly.
Treat them as a long distance extension of your company. Inform the co-packer of management changes that will impact them. This is an extreme example of this issue: I was co-packing products for a company that was purchased, and we had people we’d never worked with show up for a production run. This was the first time our company was informed of the purchase. This led to lost production time, concerns about contract validity, and questions when the new staff didn’t understand the processes or quality measures that were in place.
I tried very hard to conceal the companies and products involved in these observations from my past experiences, but I hope they can offer lessons learned and “what-not-to-do” while building your co-packer relationship.
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