Before we get started, we’re assuming that you have already nailed your recipe or formulation. After that, your next step should be to find a co-packer to make your product exactly the way you want it and at the best price point.
By asking these specific questions prior to partnering with a co-packer, you’ll be setting your business up for success in the long run. Please never assume the other party will take care of a certain aspect.
1 – Who will own sourcing for the raw ingredients and packaging components?
If the co-packer owns this, they will usually charge an additional fee. So his option only makes sense if your order run is large enough to justify that fee. Once you know what the fee is, you can add it to your margins and decide if it makes sense for you or not.
If the price is right and your co-packer is able to secure the ingredients and components you need, this option is probably best.
If the price is too high, you can always work towards using that option down the road as your sales increase.
For now, that means you will source the raw ingredients and materials yourself and send them to the co-packer to be blended and packaged into your final product.
2 – Who is verifying accuracy when receiving a product?
Make sure that when you order a product from suppliers, there is a process in place to confirm counts on arrived inventory and to test the ingredients prior to production.
The co-packer will be able to do this very easily and get you the documentation to verify quality and specifications. In addition when they manufacture your products, ask if they will supply the necessary documents and lot tracking for compliance.
3 – Who is managing the raw material inventory and keeping real time counts?
The majority of co-packers will provide warehousing for your raw ingredients and materials. Especially if you are growing and doing several production runs a month. Ask how often they will update you on those quantities.
If you are using a local co-packer they may require you to visit their facilities in-person and do cycle counts on a monthly basis.
In either scenario, find a tool like Fiddle to set reorder points for making sure you do not run out of ingredients and materials.
Also, ask if they are willing to do pre-production of blends and store them on the shelves to be able to create finished products much faster.
4 – Do they have the setup to do small runs and then grow to greater capacity quickly?
It will take time for your co-packer to dial in the production of your products and get them just right. Make sure they’re open to doing small runs at first to ensure quality but able to scale bigger runs later on. Pro tip: Ask if they will give you a deal on your small run if you commit to a specific, larger, amount per year.
Lastly launching a product company is all about cash flow and managing your inventory at all levels properly. You want to understand your production run needs to make sure you are buying the ingredients and materials at quantity breakdowns but not over buying where products will expire.
Here at Fiddle, we’re crazy about helping product brands like yours streamline their sourcing, product-costing, and manufacturing. Check out out our home page or schedule a product demo to learn how we can help your brand!
