by The manufacturing industry is undergoing major transformation driven by changing consumer demands and globalization. Contract packaging has emerged as one of the important outsourcing trends to help manufacturers remain nimble in this dynamic environment.
What is Contract Packaging?
Contract Packaging refers to the practice of outsourcing packaging functions like packaging, labeling, kitting etc. to specialized third-party contract packagers. These contract packagers have the capabilities and infrastructure to handle complex packaging requirements of various products on behalf of brand owners and OEMs.
Some key aspects of contract packaging include:
– Brand owners focus on core activities like product development, marketing while outsourcing packaging functions.
– Contract packagers take care of packaging design, procurement of packaging materials, labelling, barcode application, kitting/blister packing, secondary/tertiary packaging etc.
– Manufacturing can be decentralized while maintaining brand consistency through centralized packaging by contract packagers.
– It provides flexibility to ramp up/down packaging volumes quickly as per market demands without heavy capital investments in packaging infrastructure.
Benefits of Adopting Contract Packaging
There are several compelling advantages that contract packaging provides to product manufacturers:
Cost Savings
Setting up an in-house packaging facility requires huge capital expenditure on machinery, packaging lines, warehouses etc. Contract packaging eliminates these fixed costs and converts them into operational expenses. It significantly reduces packaging costs for manufacturers.
Flexibility
Contract packagers are equipped to quickly switch packaging volumes, package types and design with changing market needs. This flexibility is difficult to achieve with an internal packaging function and fixed assets.
Focus on Core Competencies
Brand owners can focus all their energy on product innovation, marketing, sales etc. by outsourcing non-core packaging functions to capable contract packagers.
Global Reach
Many contract packagers have geographically dispersed facilities allowing manufacturers access to global/regional packaging and distribution networks.
Quality Assurance
Experienced contract packagers have stringent quality processes and comply with global standards. This ensures consistent brand experience for consumers.
Risk Mitigation
Responsibilities like compliance management, waste disposal get transferred to contract packagers minimizing risks for brand owners.
Applications of Contract Packaging
Food and Beverage Sector
From snacks and breakfast cereals to staples and FMCG products, contract packaging is widely adopted in food processing industry. Experienced packagers help ensure packaging safety and long shelf-life.
Pharmaceuticals
Complex packaging requirements involving blister packs, unit-of-use packages are effectively handled by regulatory compliant pharmaceutical contract packagers.
Consumer Electronics
Products like mobile phones, laptops, gaming consoles require specialized secondary and tertiary packaging for protection during shipping. Contract packagers provide these value-added packaging services.
E-commerce Fulfillment
Rapid scaling of fulfillment operations to meet spikes in online orders during seasonal sales is a huge challenge. Contract packagers support these dynamic needs through packaging automation and distributed facilities.
Key Success Factors for Contract Packagers
Regulatory compliance: Packagers must adhere to stringent guidelines of FDA, cGMP, ISO etc. depending on product categories processed.
Capacity and infrastructure: Adequate facility size, latest packaging lines are required to service production needs of multiple brands.
Quality systems: Robust quality management following international standards like GMP is a must to ensure consistent product protection.
Service flexibility: Ability to quickly customize packaging configuration, design to meet evolving brand requirements.
Sustainability: Focus on reducing waste, use of eco-friendly materials will help address the environmental impact of operations.
Technology: Automation, track & trace solutions improve packaging efficiencies, visibility into packaging fulfillment.
Contract packaging is well-positioned to play a vital role in supply chain modernization through world-class outsourced packaging services. By leveraging expert contract packagers, brands can stay nimble in competitive markets and focus on innovation. With capability developments, this industry will continue accelerating outsourcing trends across manufacturing industries.
*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it
