April 13, 2024
Contract Packaging

Contract Packaging: A Viable Solution for Businesses Looking to Outsource Their Packaging Needs

What is Contract Packaging?
Contract packaging refers to the practice of outsourcing packaging operations to a third-party company known as a contract packager. A contract packager handles various packaging activities like label application, kitting, secondary packaging, cartoning, and case packing on behalf of their business clients.

Reasons to Consider Contract Packaging
There are several compelling reasons why businesses across industries are increasingly relying on contract packagers for handling their packaging requirements.

Focus on Core Competencies
By outsourcing Contract Packaging to a specialist contract packager, companies can concentrate their resources on product development, sales, and other core competencies. This allows them to efficiently utilize capital and optimize operations. Contract packagers free up a company’s resources so it can focus on revenue-generating activities.

Variable Cost Structure
Unlike in-house packaging that requires large capital expenditures on equipment, facilities, and employee salaries, contract packaging provides a variable cost structure with no major upfront investments. Businesses only pay for the volume of units packaged through pre-negotiated per-unit rates. This offers significant cost savings especially during volatile conditions.

Access to Advanced Equipment and Technologies
Contract packagers make ongoing investments to stay at the forefront of packaging technologies, automation, and line capabilities. This allows them to offer clients packaging services that may not be feasible with in-house facilities. Businesses get access to state-of-the-art packaging solutions without bearing heavy capital costs.

Flexibility and Scalability
Contract packagers are equipped to rapidly scale up or down packaging volumes as per the client’s fluctuating production and demand cycles. Their facilities are flexible to accommodate multiple SKUs, product sizes, and formats for different clients. This allows businesses to be agile and responsive to dynamics.

Ensuring Compliance and Quality Standards
Maintenance of packaging compliance, quality standards, worker safety standards, and other regulatory requirements is the sole responsibility of contract packagers. This takes significant compliance burden off the client company’s plate. Packaging defects, non-compliances and other quality issues are minimized.

Focus on Packaging Expertise
Contract Packaging specialize in packaging design, line processes, material handling, and all other aspects of packaging. Leveraging their dedicated focus and expertise delivers packaging efficiency, accuracy and cost optimization for client businesses.

Key Services Offered by Contract Packagers
Following are some of the core packaging services commonly outsourced to contract packaging companies:

Secondary Packaging
This includes adding cartons, shrink wrapping, banding, strapping, applying hang tags and other forms of secondary containment packaging after primary packaging.

Kitting and Assembly
Contract packagers kit and assemble product components, sub-assemblies and accessories before packaging. This streamlines pick-pack-ship processes.

Case Packaging
Items are organized and packed into shipping cases, pallets or other transport packages to facilitate storage and distribution. Automated case packers are often used.

Label Applicaton
Product, ingredient, nutritional, barcode and various regulatory labels are designed and accurately applied on packages by contract packagers.

Blister Packaging
Thermoformed, clamshell or bubble packaging of products is conducted under aseptic conditions in cleanroom environments.

Form Fill Seal Packaging
Automated form-fill-seal machines create stand-up pouches or bags from roll stock, fill them, seal, and prepare for secondary packaging.

Serialization and Track & Trace
Sophisticated line solutions allow applying serialized codes for track & trace of individual packs right through the cold chain as per industry regulations.

Warehousing and Fulfilment
Many contract packagers also offer integrated inventory warehousing, order fulfillment, reverse logistics and other supply chain services.

Quality Inspection and Testing
Rigorous in-process and finished goods quality checks are performed using laboratory and automated inspection equipment.

1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it