Contract Packaging Partnerships Provide Competitive Advantage

July 1, 2000

5 Min Read
Contract Packaging Partnerships Provide Competitive Advantage

Contract Packaging Partnerships Provide Competitive Advantage
by Tim McBride

The natural products industry is booming. Interest in herbalsupplements such as echinacea, ginseng and ginkgo has increased dramatically. For providers striving to meet consumer demand, competition is fierce and establishing a brand identity is critical. Industry experts are predicting that over the next three to five years, stiffer regulations for the natural products industry are likely. To meet these challenges,natural products manufacturers can draw on the experience of contract packaging companies who have served as trusted packaging partners to pharmaceutical manufacturers for years.

 Benefits of Partnering with a Contract Packager

Broad Range of Services

A contract packaging organization supplements a manufacturer's internal resources, providing not only basic packaging services, but also invaluable counsel. Many contract packagers have experience packaging a variety of items in numerous formats, including blisters, carded blisters, pouches and bottles. Their engineering staffs are trained specifically on packaging equipment. Providers may also offer package design, engineering and tooling production and printing services. Contract packagers possess a wealth of knowledge regarding packaging materials and have experience in meeting tight deadlines.

The services and counsel of contract packagers may be particularly valuable to smaller natural products companies where there is not a packaging engineer or quality assurance representative on staff. These smaller providers are numerous. A Food and Drug Administration (FDA) survey completed in February indicated that 46 percent of the firms involved in the manufacture of dietary supplements had fewer than 20 employees.

Contract packagers can advise manufacturers on the mostcost-effective format that will promote sales and use of the product while meeting regulations and specifications. For example, bottles are often selected as a packaging option because of their low cost. However, for products where dosages are required multiple times per day, a carded blister is a better option. The carded blister package increases the likelihood of the person taking each dose because graphics and dosing instructions can be included on the package as reminders.

Experience in Compliance

As regulation of the natural products industry increases, manufacturers can rely on packaging partners for assistance in complying with standards. Some providers specialize in developing the packaging for trials that can determine if the product is "clinically proven." Pharmaceutical providers that have expanded their offerings to include natural products already have processes in place to clinically test their products. Companies that solely provide natural products can remain competitive by teaming with contract packagers who have experience working with independent testing companies.

The February FDA survey indicated that larger companies more often follow published Current Good Manufacturing Practices (cGMP), with 86 percent of large firms [500+ employees] doing so, followed by 75 percent of small companies [20-500 employees] and 55 percent of very small businesses (less than 20 employees). As regulations increase, contract packagers can provide counsel on meeting cGMPs and QA/QC processes. Contract packagers train employees in operating procedures and regulations and can adopt additional customer quality procedures as needed.

Cost Efficiencies

Outsourcing packaging to a contract service organization is often less expensive than in-house packaging. Manufacturers avoid the capital expenditures on equipment and personnel required for in-housepackaging. Contract packagers already have a wide variety of packaging equipment and trained personnel in place. They also can obtain better prices on packaging materials since they are buying in large quantities.

Flexible Capacity

Outsourcing packaging is particularly appropriate during periods of increased product demand. Contract packagers have flexibility inallocating a workforce as required. Manufacturers turn to contract service organizations for turnkey packaging of large quantities (i.e. 250,000 or more units) of primary and secondary packaging. Contract packaging is useful for product launches, seasonal needs (e.g. echinacea and zincduring the cold and flu season), sampling programs that include coupons and business reply cards, mature products and unique packagingrequirements. A contract packager can assist with long-range planning to prepare for these needs. By outsourcing packaging, manufacturers can better focus on their core competencies--R&D and marketing.

Developing a Successful Contract Packaging Partnership

When selecting a contract packager, manufacturers should consider overall reputation, breadth of services, and years and areas of expertise. Capacity, flexibility to meet project changes, record keeping and project tracking skills are also critical.

Manufacturers should meet with the provider's representatives, including sales, operations, management and quality assurance personnel. The project proposal should include clear pricing that allows meaningful comparisons with other providers. It's important to ask for customer references and talk to others in the industry.

Manufacturers need to provide critical information regarding the product package. This includes the target market and use of the package (e.g. sample, trade, hospital, etc.). Other important details include requirements regarding quality, shelf life and special handling(e.g. moisture sensitivity, fragility, etc.). Manufacturers need to outline delivery dates for bulk and finished goods and manage internal approvals and delivery of these materials.

Work closely with the packaging project team early in the process to establish clear project timelines and requirements. Be on-site during the project start-up or ask for first-run samples to review.

Good contract packaging organizations should provide design options that support marketing objectives, concise quotations that outline unit costs and deliverables (including change order procedures for "extras" not originally quoted) and project status updates. Proof of adherence to quality checks and procedures as well as machine, process and package validations should be provided. Manufacturers should also expect notification of finished goods shipment and return and destruction of rejected and unused materials.

Tim McBride is the vice president of sales and marketing with Sharp, a packaging company. He can be reached at[email protected].

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