Handy Questions and Useful Tips for Working with a Contract Packer
13th August 2019
It’s in all our best interests to get an excellent result for a customer. Both parties should be at optimal efficiency at every stage of the project, from initial briefing session to final delivery. We have lots of experience with contract packing, so we put our heads together to develop some useful tips (for us and for you) to help the process and ensure positive outcomes.
Initial Questions You Should Ask
These are some initial questions you should be asking in negotiating a contract packing agreement:
• What certifications does the contract pack facility hold? If you’re supplying into retail, you’re required to have specific certification. Different certifications are required to handle any element of the contract pack process.
• Can the contract packer provide the finished product according to your specifications? This is vital in mixed-case situations and any other packing, production or distribution variant. A contract packer may be able to undertake certain parts of the process, but not all of it. This needs to be understood early on in the partnership.
• Who will be your contact in the contract pack team? This helps understand the contract packer’s capacity and if they have enough sales support. You should also ask about technical support - what other services can the contract packer provide?
• Will the contract packer notify you if a product is reclassified? If a banned product is in the formulation, who would notify you? Is the contract packer honest and open about regulation changes? What systems does the contract packer have that would apply to your products in the light of regulation changes?
• What are the MOQ’s (Minimum Order Quantities)? It’s key to establish this early with the contract packer to work out if they’re the best fit for your product.
• What is the lead time? This lets you plan your orders around anticipated sales forecasts.
• How long is the price valid for and what happens if there is an increased price of a raw material? Most contract packers review prices on a yearly basis, adjusting to reflect updates in the chemical/packaging market. This should always be confirmed in writing.
What does the contract packer want to know from the customer?
There is some basic information you should give your contract packer. Providing this can help ensure a much smoother working relationship.
• Your contract packer will need to know who you are, where you’re based, and contact details.
• They’ll want to know about your formulation. Some typical questions can include:
- Can their vessels handle what you want to pack?
- Are there any obscure chemicals in the formulation that can be challenging to source?
- Are your raw materials safe to handle?
- Is it an oxidiser?
- Is it flammable?
- Does it need heating to get it into a liquid state?
- Does it have a high powder content?
This can help them answer some internal queries they may have - can their vessels handle what you want to pack?
• Similar to above, they’ll want to know what the safety risks are. Is there anything unusual in the formulation that can create a risk to operatives?
• What’s the projected volume per SKU (Stock Keeping Unit)? A contract packer needs to be able to determine your production schedule. This helps find out whether your needs can be serviced. Each contract packer has different blend vessel sizes and needs to work out which is the best vessel to run the order.
• What’s the anticipated annual volume? Is it seasonal? Most contract packers will have capacity at different times of the year and want to know this to consider the plant’s capacity and utilisation.
• What’s your packaging specification? Contract packers need to know your final intended packaging requirements. Last minute changes create a greater risk of a mistake happening. At Techtron, we like to put everything through an approval process with the customer. Changes in the specification can affect the line running speed and alter your and other customers’ production.
• What are their payment terms? You’ll get a credit score to know if you can have credit or pro forma. There are many companies that place an initial order and then go bust, leaving the contract packer holding the chemicals, product and the debt. Contract packers don’t like one off orders because of this. We will always facilitate working with start-up companies but we need to see a clear business plan, to ensure they understand the marketplace they are entering, etc.
• They need to know if the finished product contains a chemical that requires a licence. A contract packer must ensure they have all relevant equipment required to handle the chemical.
• Are you intending to supply packaging or does it need to be sourced? Contract packers need to know everything there is about the packaging:
- Packaging size
- Size of bottle and cap
They need to build up a picture for the line operatives.
• Are you exporting? There may be additional packaging requirements if it is going on the sea or in an aircraft.
• If you are supplying the contract packer with formulation details, do you have a Safety Data Sheet? The contract packer will require this for operatives and transport. They have a responsibility as the loader of the chemicals to ensure they are safe to travel on the air, road or sea.
• If you require a product formulating, there are some specific questions you’ll be asked, such as:
- What claims you want to make about the product
- How you are using it
- Who you are selling it to
- Are there any raw materials that you do or don’t want to use
- Are there any specific colours you do or don’t want to use?
• What are your logistics requirements and how are you distributing this product? Most contract packers work just in time (JIT) and don’t like to hold stock.