Co-packing (i.e. contract manufacturing), has always offered significant operational advantages to OLDs (Own Label Distributors) and manufacturers by supplying equipment and, in some cases, key expertise in the packaging of their products. While reducing major capital costs for machinery and labor for their customers, they also provide the opportunity for them to focus on their core competencies. Co-packers often also fill a temporary outsourced need for projects, product launches or capacity. Their ability to be more flexible than larger corporations and adjust production schedules establishes them as a valued contract partner.
However, with the current effects of the Coronavirus (COVID-19) pandemic resulting in the quarantining of the world, disruption to global supply chains, the explosive and sudden transition of a primarily digitized society, and imminent changes to the present time, co-packers must now intently reexamine their role and practices. It’s crucial to quickly determine where there might be need for adjustments to business and operational practices and systems. The uncommon changes occurring demand this. To remain competitive, co-packers need to complement their customers’ brand needs and anticipate expected changes, as every segment of the supply chain has been affected.
Looking back at the past (pre-COVID-19), and dwelling on the present with a common outlook or thought that “if it’s not broke, don’t fix it” no longer serves the wellbeing of any company and is a sure way to not survive or succeed in the uncommon “new future” that is rapidly evolving. Not only is a shift in mindset necessary, but it calls upon company leadership to be willing to make a paradigm shift in their approach relating to the emerging new customer practices and possible new demands that are certain to arise out of the digital landscape reshaping the industry and everyone’s lives. It is a time for innovative and creative communicators.
With changes occurring all around, having remained in operation as an “essential business” during mandatory “stay-at-home” orders should not be a reason to have a “no changes necessary” approach. Co-packers must become willing and prepared to quickly and flexibly adapt to the changes that are likely to come to their systems and practices as a result of the expectation of equally affected customers. With a significant number of consumers working from home or simply just “shut in,” an entirely new “information nation” is erupting. Consumers are gaining more knowledge about the various segments of the supply chain, resulting in a growing awareness of a greater need for food safety. Their time-consuming day-to-day travels on a roadway or highway have been replaced with their ability to have daily access on the internet highway.
Consumers are becoming more versed and concerned about product ingredient content, labels, packaging materials, their environment and other socio-economic concerns. This massive focus on consumer personal growth and development will be, without question, a driving factor of change for OLDs and manufacturers in the food and beverage industry. This is where great opportunity lies for co-packers’ own growth while growing their customers’ brands.
Here are three key actions that co-packers can take now, to position themselves for the future.
Pay attention to and track growing consumer product trends
Identifying and tracking these trends and relating it to your customer’s product(s) will enable co-packers to collaborate with their customers to pivot and scale up their business. For example, since consumer behavior has changed overnight with a significant number of product buyers now being online, paying attention to consumer packaging material preferences could be critical, especially given packaging for e-Commerce shipment now being a dominant concern. Managing the now, preparing for the future, and being readily available to do this provides consistent support for the customer.
Review current GMP (Good Manufacturing Practices) and food safety programs
Ensure that corporate leadership and employees are well versed on these practices and requirements. With FDA providing more public awareness information online, consumers’ concern for self-care, personal health and wellness and food safety has increased. As such, keep GMP records up-to-date and be prepared for increased demand for transparency from customers.
As a result of the COVID-19 pandemic, on March 10, 2020, FDA announced postponement of foreign inspections until April 2020; and in a later March 18 press release, announced its scale-back on domestic routine inspections, expecting firms to self-regulate. Only “mission critical” cases (e.g., major recalls or product issues) would remain a priority. FDA recently announced on May 11, 2020, they’re working on a plan with the Centers for Disease Control and Prevention (CDC) and the White House to resume facility inspections. In light of this, now would be a good time to have your Quality Unit review procedures and ensure training programs are current. Also consider updating hygiene and facility sanitation procedures to include effective social working distancing and infection prevention strategies.
Evaluate all existing inventory system software and operational equipment
It is crucial to determine whether the existing software systems (e.g., warehouse management systems) and operational equipment will continue to support the demands placed on them from not just the current surges caused by changed consumer behavior during COVID-19, but also for the ongoing future. Also, if not already established, consider alternate meeting and communication means via digital platforms such as Zoom, WebinarJam, GoToMeeting, LoopUp and Livestorm, to name a few. Most offer both a free limited version and a paid flexible version.
Engage now in ways to provide greater value proposition to your contract customer for the future. While focusing on scaling your own business, collaborate with your customers in doing the same. Co-packers are a key extension of their customer’s brand. Provide feasible and innovative solutions for growth. Reassure them that despite expected changes in past practices, and present ongoing supply-chain challenges, your commitment to provide continuous improvement and sustainable quality service of their brand will persist as it did amidst this crisis, into the future.
Heather Fairman is CEO of DF Guardian Consulting, Inc. and has over 30 years in executive leadership and management experience in regulatory affairs, quality assurance (QA) and quality control (QC) environments in the dietary supplement and food supplement, biologic, over-the-counter (OTC) pharmaceutical and cosmetic industries. She is a sought-after independent consultant, transformational thought leader, writer and certified speaker and trainer, who also serves as the key technical advisor responsible for leading the development of raw materials for the herbal supply-chain market for the SIDS DOCK Island Women Open Network (IWON), an intergovernmental organization which has all the rights and privileges of a United Nations organization comprised of 32 countries. Heather has assisted and led companies through numerous FDA audits, assisted with FDA 483 responses, averted recalls and Warning Letters, and established effective quality management systems; sustainable compliance and regulatory infrastructure; and organizational programs that have fostered and established mutually beneficial contract manufacturer partnerships. Heather can be contacted at email@example.com or on LinkedIn.