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Using a contract packager

In April, we published advice from packaging professionals about selecting contract packagers (aka co-packers or private-label manufacturers). This month we provide insights about using CPs.
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Here are some of the 150+ survey responses, edited for clarity.

A number of responses centered on visits:

• Monitor the packer regularly and visit the site.

• Visit their premises and "check them out" to ensure they have a good on-time record of delivery of what they promised.

• Conduct regular face-to-face visits and performance reviews.

• Always attend first production runs, and sign off on an agreed master sample

• Plan and actively participate in the process—have ”feet on the street” at the packager. We have a quality representative in one of the cities where we do the majority of our contract packaging to ensure we get the product quality we need. We also support the validation activities that the CPs perform for producing our OTC products.

• Visit and audit the Quality Assurance and other procedures periodically.

• Make sure specifications are clear and unambiguous. Make random QA checks with your team at the contractor’s site.

• Perform periodic, agreed-to unscheduled Quality Control checks of the process.

Other views related to quality and planning were also popular:

• Demand that your CPs have the processes and systems in place to ensure product quality and compliance (for example, traceability) and efficiency. Real-time visibility of their production and inventory, particularly if it can be shared with the end customer, ensures that management has good control of the business.

• Establish your own quality expectations, determine the contractor’s ability to perform to that level, and then follow up on documentation and then LEAVE THEM ALONE!

• Give them specific and measurable specs and ask to see their documentation and operation routinely.

• Leave nothing to chance. Everything must be spelled out clearly. Have an agreed-upon process in place to handle issues before the contract work starts.

• You can never be too explicit with instructions. Also, make sure you know the key people at the packager, especially those in the warehouse, packaging, QA, and shipping departments. Make a point to visit on a regular basis, have quarterly update meetings, and generally be known at the packager.

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Some recommended a cautious vigilance:

• Never trust them completely, or as Reagan would say, "Trust, but verify."

• Watch like a hawk. Some may try to cut corners in the current economy.

• Always have a backup plan.

The majority of the responses offered advice across the spectrum:

• Develop a good working relationship and go into projects with an open mindset.

• Know your industry and the market. If your firm also manufactures internally, use your internal cost model as a benchmark and leverage in your negotiations.

• Control of components and service needs must be well-defined, followed, and executed by the packager.

• For food and pharmaceutical products, ensure that the packing equipment is cleaned to GMP/FDA standards on a regular basis.

• Work with one that offers good communication and does not over-commit on abilities or timelines.

• Make sure they can grow with you; you should be able to forecast your production needs and plan accordingly.

• The intangible value of incumbents' experience is often understated in the bidding process.

• In a GMP industry, control of changeovers is key; really understand the CP’s change process and how product and materials are controlled. Make sure you have written documentation for every aspect of your project from technical to financial and who is responsible for what.

• The CP should be provided with contract details well in advance that explain all requisites of required packaging that include technical parameters, if any. Also, the physical goods should be delivered to them or released to them in time; joint supervision of packaging work should be done by your company’s representative; and proper records on completion of work should be maintained.

• In general, the CP will only be as strong as its management.

• Check to see if they are financially sound and if they have had any product recalls.

• Because CPs need and want your business, they cut out all the politics that are sometimes a roadblock internally.

• Conduct a ship test to ensure structural integrity. Visit respective plants to ensure quality and to understand the CP’s operations. If custom packaging is being purchased, outline inventory liability. If capital is required, clarify volume expectations and track when depreciation expense is fully absorbed.

• It is a partnership; make them swear that WE are in this together—ownership!

For further information about contract packaging and CPs, visit the Web site of the Contract Packaging Assn.

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