Co-manufacturing can be a game-changing strategy for companies looking to cut costs and streamline their production process. However, it can also be confusing if you're not familiar with the terminology. In this post, we'll break down the top terms you should know when working with co-manufacturers. With this knowledge, you'll be able to communicate more effectively with your partners and get the most value out of your co-manufacturing relationships
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Types of Manufacturing:
Contract Manufacturing
Contract manufacturing is a type of co-manufacturing in which one company contracts with another company to manufacture ( make something on a large scale ) a product on its behalf. The contract manufacturer is responsible for all aspects of the manufacturing process, from sourcing materials to shipping the finished product to the customer.
Co-manufacturing
Co-manufacturing is a term that refers to the process of manufacturing a product on behalf of another company. Private-label food companies often rely on co-manufacturers to produce their products, as they may not have the facilities or expertise to do so themselves.
(What is a private label? Just scroll down a tiny bit!)
Co-packing
Food businesses often choose to work with a copacker instead of expanding their in-house production. Co-packing is the process of packaging food products for other companies. This can help businesses save time and money, as well as scale their operations to meet increasing demand. Working with a co-packer also allows businesses to outsource some or all of the production process, which can be helpful if they do not have the necessary equipment or personnel. Co-packing can be an efficient way to produce food products, and it can also help to reduce costs.
Toll Manufacturing
Toll manufacturing is a type of co-manufacturing in which one company contracts with another company to manufacture a product on its behalf. The toll manufacturer charges a fee (or “toll”) for its services, and the customer pays this fee regardless of whether the product is ultimately sold or not.
Private Label
Private label products are those that are manufactured by one company but sold under another company’s brand name. Private-label products are often found in grocery stores and drugstores, and they can be either generic or brand-name products.
White Label
A white-label product is one that is manufactured by one company but sold under another company’s brand name. Companies often choose to use a white label in order to sell a product under their own brand name. This allows them to control the price, packaging, and marketing of the product, while still being able to rely on the manufacturing expertise of another company. White-label products are typically less expensive than branded products, making them attractive to cost-conscious consumers. In addition, many companies see white label products as an opportunity to create a new brand identity or expand their product lineup without incurring the cost of developing and manufacturing their own products.
Commonly Used Terms
Quality Control
The process of ensuring that products meet certain standards for quality and safety.
Compliance
Adhering to industry regulations and standards, such as those related to food safety and labeling.
Lead time
The amount of time it takes for a co-manufacturer to produce an order.
Capacity
The amount of production that a co-manufacturer can handle at any given time.
MOQ
Minimum Order Quantity, or MOQ, is the smallest amount of units that a supplier is willing to produce for an order. This number is typically based on the production costs associated with the product, and it can vary greatly from one supplier to another. For example, a supplier might have an MOQ of 100 units for a particular product, while another supplier might have an MOQ of 500 units for the same product. When choosing a supplier, it's important to consider the MOQ to ensure that you're ordering enough units to meet their minimum requirements. Otherwise, you may end up paying more per unit than necessary.
FOB vs Delivered
Freight on Board, or FOB, is a term used in shipping to indicate who is responsible for paying freight costs. In most cases, the FOB term is used to indicate that the buyer is responsible for the shipping costs, but it can also be used to indicate that the seller is responsible for the shipping costs. To find the true cost of a product, you should always ask for the "delivered" price which will include the cost of the product plus shipping.
Shelf Life
When it comes to food, shelf life is the length of time that a product can be stored before it begins to degrade. Food expiration dates are intended to give consumers some guidance about how long a product will remain fresh. However, it is important to note that these dates are not mandatory, and they are not always accurate. In many cases, food can be safely consumed past its expiration date.
GMP
Good Manufacturing Practice, or GMP, is a set of standards that regulate the manufacturing process of food, drugs, cosmetics, and other consumer products. The goal of GMP is to ensure that these products are safe for human use and meet the quality standards set by the relevant regulatory body. To do this, GMP requires manufacturers to control the environment in which their products are made, as well as the raw materials used in production. In addition, manufacturers must have adequate quality control procedures in place to ensure that their products meet all safety and quality requirements.
Finding a co-manufacturer
Pick Your Packer is a tool for brands, offering connections to a wide array of food & beverage suppliers, co-manufacturers, and private label services. With thousands of products and services available, it's dedicated to efficiently scaling your business.
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