Choosing a 3PL Over Your Co-packer for Fulfillment Saves Your Business Money and Headaches

As a business owner, navigating the maze of co-packing and co-bottling services can be challenging enough, but when you add fulfillment into the mix, it becomes even more complex. You might be tempted to ask your co-packer to handle fulfillment as well—after all, why not consolidate services? While this approach seems convenient, it can lead to unforeseen complications. A customized third-party logistics (3PL) provider like All Points can offer substantial advantages. Their extensive expertise in inventory management, storage, and fulfillment can translate into significant savings for your business.

‍

Do Co-packers Offer Fulfillment Services?

In general, some co-packers do offer fulfillment services, but this varies significantly from one company to another. For instance, certain co-packing companies in the Atlanta area do extend their services to include fulfillment, while others strictly focus on production and packaging. 

For example, one company located near Atlanta, not only provides co-packing services but also encompasses fulfillment services as part of their offerings. They handle everything from production to storage and shipping, aiming to provide a comprehensive solution under one roof. 

On the other hand, companies like Atlanta Bottling Works focus primarily on their core competencies of bottling and packaging services, like private label manufacturing and helping clients navigate the maze of quality control in the food industry. They do not include fulfillment in their portfolio, leaving that aspect of the business for other specialized providers. 

What's crucial to understand is that even when a co-packer offers fulfillment, it doesn't necessarily mean they excel at it or that it's the best choice for your bottom line. That's not pointing a finger at any co-packer. Co-packing companies can offer exceptional customer service for clients who want help with fulfillment, but they still can't offer the services and discounts possible of an experienced 3PL.

The core competencies of these businesses are just different. Co-packers are experts in manufacturing and packaging your goods, not in managing inventory or shipping logistics efficiently. Even when they're good at it, they're unable to offer efficiencies in cost that companies specializing in fulfillment can offer their clients or help with critical functions that affect the logistics part of your P&L like inventory management.

‍

The Hidden Costs of Using Your Co-packer for Fulfillment

When it comes to fulfillment, leveraging your co-packer might initially seem like a convenient and cost-effective solution. However, hidden costs can quickly add up, affecting your business in unexpected ways. 

First, consider expertise and efficiency. Co-packers specialize in production, not fulfillment. Their lack of experience in inventory management, storage optimization, and logistical planning can lead to inefficiencies and mistakes. This can result in longer processing times, order inaccuracies, and ultimately, customer dissatisfaction. 

Moreover, scalability is another crucial factor. As your business grows, your fulfillment needs will too. Co-packers often lack the advanced infrastructure and flexibility that a 3PL provider can offer. This means more frequent delays and disruptions, as they struggle to keep up with increased demand. They often do not have warehouse space or limited warehouse space for storage; that means they might be able to meet your production schedule for customer demand, but you'll pay a lot more to the contract packer than a 3PL to store it.

Then there are opportunity costs. By entrusting fulfillment to your co-packer, you might miss out on the specialized services and strategic advice a 3PL can provide. 3PLs often have sophisticated systems and analytics to track and optimize your supply chain, helping you save money and improve efficiency in the long run. 

Don’t overlook the hidden financial costs as well. Co-packers might charge additional fees for storage and handling, which can exceed the more predictable and often lower rates provided by 3PLs with industry expertise. These unforeseen expenses can chip away at your margins over time. 

Lastly, think about the impact on customer experience. Delayed or incorrect orders harm your brand’s reputation and can lead to loss of repeat business. A specialized 3PL ensures a smoother fulfillment process, which keeps your customers happy and loyal. 

While using a co-packer for fulfillment might sound like a logical choice, the hidden costs in terms of efficiency, scalability, opportunities, finances, and customer satisfaction clearly argue against it. Partnering with a seasoned 3PL like All Points can offer significant advantages that drive long-term savings and business growth.

‍

How a Co-packer and 3PL Work Together Effectively

Co-packing is still critical for many businesses. Nothing scales your product line like an effective co-packer with an experienced team and a production facility, especially a co-packer specializing in your specific type of product But you will still need a fulfillment solution even if you have the perfect contract packaging services or packaging solution for your business.

By choosing to work with a co-packer for production and a 3PL for storage, warehousing, and fulfillment, your business can take advantage of each provider's specialized expertise. Here's how the process generally unfolds: 

1. Production: Your co-packer focuses on the production of your goods. They handle the entire manufacturing process, ensuring that your products are created to your specifications. This is where things like recipe development, ingredient sourcing, food safety checks and quality control, and private label application happen. Once production is complete, your co-packer prepares your products for the next stage, often packaging them in bulk or ready-for-sale units. 

2. Transfer to 3PL: After production, your co-packers transfer your products to a 3PL provider. This transfer can be seamless, coordinated between the co-packer and the 3PL to ensure that your products are moved efficiently and safely (again, think food safety). This stage often involves detailed coordination and communication between the two providers. 

3. Storage and Inventory Management: Once your products arrive at the 3PL's facility, they are stored and managed in a professional warehousing environment. 3PLs specialize in inventory management, keeping track of stock levels, and ensuring that products are stored in optimal conditions. This expertise helps in minimizing shrinkage, reducing damage, and managing stock precisely. 

4. Order Fulfillment: When an order is placed, the 3PL handles all aspects of fulfillment. They pick, pack, and ship orders to your customers so they can get on store shelves or even straight to people's doorsteps. Their experience in logistics and fulfillment ensures that orders are processed quickly and accurately, enhancing customer satisfaction. 

Efficiency and Cost Savings: This division of labor allows each provider to focus on what they do best. Co-packers can dedicate their resources to producing high-quality products, recipe development or scaling of an existing recipe, private labeling, and all the nuance of the packaging process (like choosing whether you need flexible packaging like plastic containers). 3PLs, on the other hand, can leverage their expertise in logistics and warehousing. This specialized approach not only improves efficiency but also translates to significant cost savings for your business. By using a 3PL, you benefit from scalable solutions, reduced overhead costs, and the ability to focus on growing your business rather than managing logistics. 

Overall, the partnership between a co-packer and a 3PL can streamline your supply chain, enhance product handling, and ultimately lead to more savings and better service for your business.

Wrapping It Up...

All Points has extensive experience teaming up with contract packaging companies to pair their packaging services with best-in-class fulfillment services. We'd love to walk you through how our inventory management and fulfillment expertise amplifies packaging services you're considering.

FAQs

What does a co-packer do?

A co-packer offers companies a wide range of contract packaging services. They can help with ingredient sourcing, getting your product line Kosher certified, and ramping up production to meet customer demand. They offer their clients not only access to professional packaging equipment, which speeds up the packaging process, but also industry expertise since a co-packaging company specializes in these functions. Co-packers often help with the production of food items, whether it's salad dressing, BBQ sauces, balsamic vinegar, other condiments, or even baked goods.

What is the difference between manufacturer and co-packer?

That depends on the contract packaging companies you consider. Sometimes, a contract manufacturing company creates the product, and the co-packer handles all aspects of the packaging solutions. But some contract packaging companies offer manufacturing and packaging solutions. You may find that you save money if you use a co-packer for both manufacturing and packaging so that you don't pay to move your products to the co-packer after they're produced.

Do I need a co-packer?

You likely need packaging services from a co-packer if you're struggling to keep up with growing demand because of a lower in-house production capacity or have plans to expand into a larger market. A co-packer likely has access to packaging equipment that streamlines the entire process and preserves product integrity that you do not.

‍