More flexibility, lower costs
In the meantime, co-packagers offer tailor-made full-service solutions from packaging development and production through storage and delivery to supply chain optimisation.
For such orders, well-positioned service providers live in contract packaging, where they can fully exploit their strengths such as individual advice, comprehensive service and enormous flexibility. In 2018, Packservice PS Marketing GmbH from Karlsruhe, Germany, took the initiative to ensure that a well-known retailer enthused customers with a Christmas calendar under its own brand logo. Packservice not only organised that the delicacies supplied by various manufacturers were sorted into 1.5 million individual folding boxes and that the calendars were composed of 24 different boxes each.
The packaging specialist took over the quality control, shrink-wrapped the calendars and packed them in transport cartons for branch dispatch. The service provider also supported the development of packaging materials. It cooperates in a network with experts on all packaging issues. “We advise and support along the entire value chain, from packaging development to delivery,” explains Sales Manager Michael Spieth. “In this way we bring the best quality goods to the point of sale, often in displays provided by us for as much attention and turnover as possible – more and more customers want this all-in”.
Packservice plays in the top league of contract packers, with a comprehensive range of services and a focus on consumer goods. Overall, however, the market for so-called co-packing is rather confusing, which often makes it difficult for potential customers to choose a service provider. The spectrum of providers ranges from workshops for people with disabilities to small businesses, which mainly employ mini-jobbers, to specialised medium-sized companies and international corporations. Some concentrate on certain sectors, others are broadly based. Some have come into the business through the competence for a certain material, such as cardboard boxes, others through logistics experience. Some see contract packaging as the filling and production of foodstuffs, while others see their service as simply distributing parts of the automotive industry from large containers to smaller packaging for delivery to workshops.
Common to most contract packers is the desire to benefit from the strong growth of the market segment. The worldwide figure is expected to be 12 percent annually, as consumer goods manufacturers in particular are increasingly relying on individual packaging and special offers, which they prefer to outsource. Such figures have prompted Kuehne+Nagel to consider its own contract packaging service, which could offer customers a one-stop shop in the form of collaborative robots (cobots), a complete service covering all aspects of the subject, through cooperation with local suppliers and the use of state-of-the-art technology.
For Matthias Giebel, the entry of large companies, some of which are far removed from the industry, into the contract packaging business is only logical. “The high growth rates are a logical consequence of the general trend towards individualisation in packaging, for which manufacturers need a service provider,” says the partner of Berndt+Partner Consultants GmbH in Berlin, which specialises in packaging topics. “Many branded companies shy away from tying up capital with machines and at the same time want to differentiate their range with further special formats – this naturally makes competent contract packers important partners, especially as their use offers more flexibility at lower costs.
"Many branded companies shy away from tying up capital with machines and at the same time want to differentiate their range with further special formats - this naturally makes competent contract packers important partners, especially as their use offers more flexibility at lower costs." Matthias Giebel, Partner Berndt+Partner Consultants GmbH
Clients have always benefited from time and cost savings when outsourcing. However, many contract packers now offer such a broad range of services that they not only save their customers money, but also relieve them of tasks far along the value chain. Most companies have recognized that this is vital for survival: 90 percent of those surveyed said in a survey by the European Co-Packers Association (ECPA) that they were counting on full service. Packservice, with around 30 locations in Germany, Austria and Switzerland, for example, is also active on customer sites, pushing the offer of value-added services, combining the use of machines with manual work for high flexibility. Ultimately, however, each provider must clarify for itself how extensive the service must be in its niche or what kind of complete service helps it to win new customers.
E-commerce is the growth driver
The industry is strongly influenced by the enormous growth in e-commerce, which is also likely to change contract packaging in the long term. “If platforms such as Amazon use data analysis to show their retailers which packaging variants have potential, or supplement their fulfillment with contract packaging, then service providers will have new opportunities,” says consultant Giebel. “The only question is how strong their position will become. It would be better to try out new packaging concepts directly with industry. If, for example, a manufacturer of cleaning agents reacts to the ecological awareness of its customers by offering the online order in reusable containers with a kind of deposit system, it can send a tank truck to the contract packer. After the order has been placed, the packer fills the desired quantity into bottles for the customer and organises delivery and take-back. Ideally, all the machines for packaging and labelling are in the contractor’s hands, and the manufacturer delegates the work completely.
If you are a contract packer and venture along the value chain, you could take over the material selection and design of the packaging in one direction and have it produced. Or connect to the customer’s order system in the other direction in order to process orders autonomously. Thimm Packaging Systems, for example, stored the flowers of an online florist as part of a Mother’s Day campaign, combined the fresh goods with the selected gifts – such as chocolates or sparkling wine – and the greeting card after receiving an order, and sent them to the recipient on time.
Mass customization at colordruck Baiersbronn W. Mack GmbH & Co. is not least due to the direct connection to the customers’ web shops. KG as an important topic for the future. As a packaging service provider in the northern Black Forest, the company offers customized full-service solutions from a single source, primarily to customers in the confectionery, non-food, cosmetics and pharmaceutical industries, enabling them to concentrate on their respective core competencies. “We see exciting new services in the fact that we can accept orders directly into our workflow via order injection,” says Managing Director Martin Bruttel.
Contract packaging - more than just packaging Service offers from service providers • Support in the planning of advertising or seasonal campaigns. • Development and design of new packaging concepts or promotional packaging. • Purchasing of materials and production in our own company or from partners. • Distribution of the delivered products in packaging for the respective purpose. • Individual combination of products to bundles by hand or machine. • Adding information, such as medication leaflets. • Packaging of the newly configured products, for example by blistering or shrink-wrapping. • Coding and sealing of the packaging in accordance with legal requirements. • Labeling and printing the packaging with advertising or supply chain information, for example. • Storage and delivery in cooperation with a logistics service provider, including connection to the client's IT system.
Customer-oriented thinking, flexible and fast action
Of course, this requires a close exchange with the customers as well as continuous investments in IT and technology. But these are necessary anyway in order to fulfil the customer’s general desire for speed, flexibility and comprehensive outsourcing of packaging logistics. “Adaptation to the customer’s circumstances and joint solutions for the customer are the decisive success factors in contract packaging,” says Marion Haist, Project Manager Packaging Service at colordruck Baiersbronn. These must then be implemented with modern technology and consistent quality management, among other things. “Certification, effective controls, batch tracing, temperature-controlled production rooms with documentation and secure storage rooms are a matter of course for us; they are an essential part of a competent complete contract packaging offer,” emphasizes Haist.
The pharmaceutical industry shows just how largely contract packers relieve their customers and make their involvement in some markets profitable in the first place. There, manufacturers may still pack their centrally manufactured drugs in primary packaging. But at the latest they leave the distribution in folding boxes to service providers. They not only add leaflets that contain the information required according to local regulations in the local language, but also provide initial opening protection and an individual identification feature to prevent counterfeiting. In addition, packaging with printed features makes it easier to track and optimize the entire value chain.
Start-ups and corporations benefit equally from co-packaging
It is important that the service provider has the necessary approvals in order to operate as a contract packer for pharmaceuticals, such as Bellwyck Faller Pharmaceutical Services GmbH in Großbeeren near Berlin. The joint venture of August Faller GmbH & Co. KG in Waldkirch and Bellwyck Packaging Inc. in Canada, for example, facilitates its customers’ access to smaller markets such as drugs for rare diseases. “Sometimes we receive a specific drug from our customers in batches of 100 or 500, but it has to meet local requirements,” says Michael Németh, Director Business Development. “Our approvals according to §13 AMG allow us, for example, to change pack sizes, exchange inserts or apply new labels. This helps the customer to bring his product into small markets legally secure and at manageable costs – compared to outsourcing, packaging activities in his own company would be uneconomical. Bellwyck Faller also supports its customers in clinical studies, i.e. the testing of new products.
Especially for start-ups, packaging services for the distribution of their products are crucial for success. Bellwyck Faller helps iuvas medical GmbH in Munich with the market launch of sippa. The innovative drinking aid for people with swallowing disorders or mobility impairments consists of a cup with a movable membrane that ensures a permanent fluid level at the upper edge of the container, which makes drinking easier. While searching for a partner for packaging and instructions for use, iuvas managing director Jonas Zimmermann came into conversation with Michael Németh: “I realized how complex the subject really is and how important packaging is in the supply chain.”
Bellwyck Faller not only became a contract packer, but also a market launch partner. Among other things, Németh’s team took over the assembly of Sippa, i.e. the connection of cup and membrane. This included the development of standards for quality management and a plan as to how a partial and later extensive automation is possible for larger quantities. “The cooperation with Bellwyck Faller has brought us a big step forward in the commercialisation of our idea,” says iuvas boss Zimmermann. And Bellwyck Faller expert Németh says: “Sippa serves as a prime example that co-packing can be much more than just packaging products”.
