Food for Thought: Want to avoid supply chain challenges? Make these 3 contract packing action items part of the fiscal year planning.
If you are a food manufacturer planning for your next fiscal year, you should start preparing for the increased demands by focusing on your packaging capacity and how it will affect your business through these growth areas:
- New product introductions
- Seasonal product launches
- Overflow capacity
The Need for Capacity:
In the case of packaging, planning for the worst-case scenario means planning for the best-case scenario – business growth that exceeds your expectations.
You want to be sure your customers (grocery store chains) get the products they want when they want them. That means creating a seamless path from the plant to the packaging facility/distribution center to the store shelf (or freezer) without having to miss opportunities because of inadequate capacity. When you make contract packing a key element of your fiscal year planning, you’ll have resources to:
- Satisfy customer (grocery store chain) requirements and consumer demand
- Handle regional production for new test markets
- Support the nationwide launch of new products
Any of these scenarios is critical to business growth, so success means being able to access the resources and capacity you need – in the right format, in the right place with a network of co-packers that can swing into action at any given time.
Fiscal Planning Risks?
Not allocating enough capacity for packaging or lining up contract packagers can result in myriad issues. It can negatively impact your customer service, your bottom line, or both. Here’s a short list of potential risks:
- Out-of-stock issues: when you can’t get products onto store shelves or respond to upticks in consumer/customer demand, sales and service both suffer
- Lost customers: an inability to meet customer demand can turn good customers into lost customers very quickly
- High costs: when you don’t plan for contract packaging and must scramble to meet demand, you end up paying extra to expedite shipments
- Partial order fulfillments: cutting product shipments because it’s all you have not only increases costs but compromises customer service
Three packaging considerations to factor into fiscal year planning:
The best way to overcome these challenges is to prevent them from happening in the first place. To make sure your food manufacturing supply chain is agile and ready, consider these three factors when planning for the next fiscal year:
1. Supply chain capacity:
Do you have the capacity you need to keep pace with business growth, whether it’s driven by new product introductions or seasonal surges? Being able to fulfill orders in the quantities and time-frames required means having flexible capacity (in assets, resources and people.) To react nimbly to unpredictable demand, make sure you have access to the right resources:
- Flexible labor pool: to ramp up or down as demand ebbs and flows
- Multiple packaging lines: to simultaneously fill multiple orders
- Having a co-packer or stable of co-packers on standby to support your seasonal and new product business demands.
2. Flexible capital:
The capital costs of equipment and facilities can be daunting. Using a contract packer makes it easier to reduce overhead costs and reduce time to market. An established co-packer will have lines and the resources to get the job done, enabling you to invest in capacity without the capital expense or risk.
3. Package format varieties:
Packaging is not a one-size-fits-all undertaking. Make sure you have the right packaging formats and equipment to handle new product introductions.
If you outsource to a packaging partner, choose one that offers a comprehensive selection of design and implementation capabilities and supports a range of packaging formats. Make sure your co-packer can design, pack, store and ship your products, combining packaging and source-to-shelf services to get products shelf-ready and to market when/where you need them. Look for flexibility, so you can offer products in different packaging formats.
Do you want to make smart decisions about packaging and be able to accommodate new product launches, expected/unexpected surges in demand and overflow capacity? Factor contract packaging into your fiscal year planning to meet supply chain and customer requirements and deliver more reliability with better bottom line results.
Written by Dwight Sevaldson, Director of Business Development, Ryder Supply Chain Solutions
Dwight Sevaldson is Director of Business Development for Ryder Supply Chain Solutions. In his current role, Dwight is responsible for helping food manufacturers find ways to optimize their contract packing and supply chain operations. Dwight brings over 30 years of experience in the food manufacturing space. Prior to Ryder, Dwight worked in a variety of plant management and corporate roles while with Quaker Oats/Gatorade. After Quaker, Dwight held a variety of contract manufacturing management roles at General Mills, Wrigley Gum, Coca-Cola and Minute Maid.