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Success handling excess-capacity needs requires forethought, planning

Brand owners that face fluctuating production requirements should choose their contract packagers very carefully. Contingency plans are highly recommended.

VALUE CHARACTERISTICS. Robert Pericht, senior vice president, warehouse operations at Saddle Creek Corp.'s Harrisburg, NC, facil
VALUE CHARACTERISTICS. Robert Pericht, senior vice president, warehouse operations at Saddle Creek Corp.'s Harrisburg, NC, facil

Contract manufacturers and packagers often must ramp up production to accommodate increases in product demand. Sometimes this demand is planned and totally expected, such as an increase in seasonal sales. At other times, however, the need for increased capacity arises unexpectedly, as in a product launch that has proven successful beyond expectations. Upfront careful planning and meticulous research are key to handling these production increases smoothly and successfully.

However, without a contingency plan in place, what should be a serendipitous turn of events could become a monster headache. Two co-packers and one former consumer packaged goods (CPG) executive seasoned in contract manufacturing and packaging relate their experiences with capacity increases and offer some welcome advice.

Foremost, they all agree, hire the right contractor to handle your needs—now and in the near-term future. Following are suggestions on what to consider to meet fluctuating product demands.

“Available capacity, quality, and financial stability should be the three most important factors for consumer packaged goods companies searching for overflow volume needs,” says Nicole Lemus, director of sales-contract manufacturing at Century Foods International,  a Sparta, WI, division of Hormel Foods Corp.

“It is of the utmost importance that the contract packager understand the ultimate goal: Never let there be a lapse of delivery to retail,” Lemus adds. “Typically, when excess volume is needed, it means product sales are doing better than expected. This is good news for everyone. It is imperative that the contract packer has experience working with retail sales, tight timelines, and supply chain pressures. CPG companies need to rely on quality and not expect anything less from their chosen co-packer than their internal requirements dictate.”

Assessing value characteristics

Robert Pericht, senior vice president, warehouse operations at Saddle Creek Corp. , Lakeland, FL, further adds that during their qualification process, brand owners should ask prospective contract packagers to demonstrate four value characteristics that signal a quality operation.

• Flexibility. The co-packer should be able to show an ability to change staffing and adjust processes easily to handle excess capacity needs of its clientele;

• Agility. The company should be able to prove its ability to respond quickly to changing needs;

• Aptitude. The co-packer should demonstrate that it has the right knowledge to handle the job. The packer also should be able to obtain the right equipment to demonstrate that they understand the process as well; and

• Ingenuity. The company should be able to explain how and why it is good at what it does.

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