Contracting With Your Co-Packer Part II

Q.  What questions should I ask the company that will be manufacturing my products for me?

in my last blog I referred to this article from North Carolina State University, which has a lot of guidelines on how to pick a co-packer.  I’ll finish answering those guideline questions and hopefully you will work with Best Brand Bottlers, a leading thermal acidified manufacture, specializing in Condiments, Dressings, Marinades and Sauces!

• What will render the product unacceptable? What are the appearance factors such as color, separation, piece size, and texture? Who will judge adequacy of flavor and taste?   The main acceptable/unacceptable determination factors are flavor, consistency, and appearance.  First and foremost, the product has to taste as good as the samples you approved after we replicated your recipe.   Second, every time we manufacture the product, it should look and taste the same as it did for the previous production runs.  Third, there shouldn’t be a noticeable variance in the appearance of the product at all.    We’re confident in our production processes and we strive to continually improve them. 

• What are the appearance factors for the container, such as label placement, closure gasket materials and closure color, or neckband placement, size and color? How tight is the closure to be?   Consistency is key.  Most of our processes are automated and we visually and manually check each process during the production run.  You should have the same head space for the fill, the cap should be as tight as it can be, the neckband should be in the same spot and we will insure that the packaging is the same each and every time.  We specify these packaging products from our vendors and work with the same suppliers to insure consistency.

• Who is responsible for disposal and disposal costs or rework of unacceptable product?

• The entrepreneur should furnish labels, what size are they to be, what style and orientation, and how are they to be wound? (It is recommended you have the copacker specify the labels in writing to be sure they will run on his equipment).

• How much lead-time is necessary for the next and subsequent production runs to be delivered?

• Will the copacker be required to furnish grade certifications, third party audits or other certifications of lots and batches? The copacker should certify that the label statements are accurate.

• What lot or batch coding is to be used? Where will it be placed on the container and how will ingredient processing and testing records be filed to correlate with the code?

• What is the manufacturer's recall plan? Be sure you have a copy. How are you to be notified?

• Is there a noncompete agreement with the copacker? Are confidentiality and privacy issues covered?

• What finished product testing will be provided?

While there may be many other points to be covered in the contract, the above represents those points for which many disagreements occur. While we recommend an attorney's advice on contracts, the small entrepreneur may find the cost prohibitive.

Make the Relationship Good

A good working relationship with your copacker and an agreement which covers what he is expected to provide will make your venture more pleasant, and hopefully, more profitable. Get the copacker on your team. Give him a chance to be properly reimbursed for his services, then concentrate on selling your product!

Contracting With Your Co-Packer Part I

Q.  What questions should I ask the company that will be manufacturing my products for me?

Well, first thing is that we believe that it is great that you are doing your homework.  At Best Brand Bottlers, we believe that the best customer is an informed customer and the more informed the better.   

This article from North Carolina State University has a lot of guidelines on how to pick a co-packer.  I’ll answer those guideline questions and hopefully you will work with us! 

What are the services you are contracting for? The services that you will be contracting for vary from customer to customer, but usually they include the following:

1. pH testing.  This is so we can be sure we are authorized to manufacture your product for you.
2. Recipe Replication.  This is so we can be sure we can recreate your recipe to your satisfaction
3. Formula Creation.  This is so we can be sure that we can manufacture your recipe on a large scale.
4. Nutrition Analysis and Ingredients Statement.  This is to provide your nutrition panel and ingredients for inclusion on  your label.
5. Food Processing Authority Letter.  This is to provide a Food Processing Authority Letter, which is transferrable and any co-packer should be able to manufacture your product with a copy of this letter.  We work with you and an independent lab. 
6. Pricing.  This is to provide you a per case price for the minimum run and one price break for 1,000 cases.
7. Manufacturing Package. This is to provide a full package of all the information that I mentioned above in both soft and hard copies.  After all, it is your recipe and your product.

• Where are records to be kept? We keep all production run copies on our premises in both soft and hard copy. 
• How will final product quality be checked?  The two things that we must check for during the production process are pH and temperature.  After production we check to make sure that the lid/cap for each and every unit has a vacuum seal and/or tamper proof shrink bands.
• What ingredients and supplies are you responsible for purchasing or providing? This depends on the type of co-packing job we will be performing for you and is negotiable.  For example, a toll packing job is when you simply wish to have us manufacture your product and you purchase everything, have it delivered to us, and we do the rest.   However, usually we are responsible for the purchase of all ingredients and supplies.
• What is the disposal for excess ingredients or supplies which you purchase or furnish?  The only excess ingredient that we would have to dispose of would be if we were using fresh produce and couldn’t purchase the exact amount that we would need for production.   We use this a big factor we take into consideration when we create your manufacturing formula, in order to mitigate any waste.
• What processing manipulations will be required for ingredients such as slicing, dicing, or blanching? Are piece sizes specified?  As your co-packer we will work with you on ingredient specification, including slicing, dicing, blanching and piece size.   This is done for every recipe.
• Will there be samples furnished for your approval prior to the first production run? Will there be storage/stability or finished product tests?  During our R&D process we produce samples for your approval before the first production run.  We keep one unit for quality control for the life of the product. 
• Are you to be present and consulted during processing plant runs? If so, are you covered under insurance or Workmen's Compensation?  Due to liability concerns, we do not allow customers in the production facility during production. 
• Will you have any coverage under the manufacturer's product liability insurance? If so, what will it be? We have a $3M product liability insurance policy.  Note that it will be necessary for you to furnish your own liability insurance to sell your product to stores.
• What are the critical factors which must be met in processing, such as pH, packing temperatures, or heat processing? Require documentation that these have been measured and met.  Our two critical factors are pH and temperatures.  We check these factors during the production process and document them on our production worksheets, which we keep on file in hardcopy and softcopy.
• Are ingredient substitutions accepted? What are the limits? Are these covered in your ingredient specifications? Note that manipulation of ingredients may render your ingredient statement or nutritional information on your label inadequate.  During the R&D process we work with you on ingredient specification and recommend ingredient substitutions. This is critical to your recipe replication and production formula.   We won’t change ingredients without your approval.  In most cases ingredient substitutions are mostly made with regard to brand.
• The contract should note scheduled processes which must be filed and certifications which must be obtained. If the product is listed under a marketing program such as "Goodness Grows in North Carolina" there must be certification of use of required ingredients.  Our contract notes this.  We are a participant in the Fresh from Florida program. 
• What is the delivery date of the finished product? Must it be immediately removed from the premises?  We require a 4 week lead time for production and we prefer that the product is removed immediately.  We work with you on arranging freight shipments from our facility to your facility.
• What are the payment terms? Our payment terms are 50% down and the remainder on delivery.