VALUE-ADDED SERVICES & FULFILLMENT

Contract
packaging

Also called
Co-packing
Reading time
4 minutes

Contract packaging is work performed by an external provider to package or repackage products to an agreed specification. It can include assembling multipacks, applying labels, preparing retail displays or changing packaging for a sales channel.

FROM COMPONENTS TO AN APPROVED FINISHED PACK

  1. Receive & verifyCheck products, packaging materials, quantities and relevant lot details.
  2. Pack to the briefAssemble, label or repackage against approved work instructions.
  3. Inspect & releaseCheck the finished pack, reconcile materials and release approved output.

Agree the sample, inspection criteria and exception process before starting the production run.

A WORKED EXAMPLE

12,000 components.
1,000 finished packs.

A brand supplies 12,000 identical units and asks a co-packer to create 1,000 twelve-unit retail multipacks. Each finished multipack has its own agreed identification and packaging specification.

Before work starts, agree how the component stock is consumed, how finished inventory is created and what happens to shortages, damaged units or leftover materials.

The finished retail pack might be one each of its new SKU. That does not make the original individual unit and the multipack interchangeable in the item master.

Define the billable output

At an illustrative labour charge of $0.40 per finished multipack:

$400

1,000 finished packs × $0.40 = $400 labour.

The same $0.40 applied to 12,000 component units would produce a $4,800 calculation. The billing unit must be explicit.

This is arithmetic, not a market rate. Materials, setup, inspection, storage, waste and transport are excluded from this example.

What belongs in the packaging brief?

Product-specific obligations and retailer rules need their own review; a service label does not establish compliance.
SpecifyInclude in the brief
Finished outputPack size, item identity, approved sample and acceptance criteria
MaterialsWho supplies cartons, labels, inserts and protective packaging
TraceabilityHow lot, expiry or serial information must be retained when applicable
Quality checksInspection steps, sampling rules, hold process and approval owner
ReconciliationExpected yields, recorded waste and disposition of unused materials

Kitting often focuses on grouping components into an orderable set. Contract packaging can also change the physical presentation or packaging. Confirm the actual work rather than relying on either label.

Identification needs attention when products are repacked. A product or trade-item identifier and an identifier for a logistics unit serve different purposes. Confirm label data and placement against the intended packaging level and customer requirements.

WHAT THIS MEANS FOR YOUR QUOTE

Price an approved job with defined outputs

Request separate lines for setup, labour, supplied materials, inspection, rework, storage and dispatch. State whether labour is billed per finished pack, component, hour or run.

Confirm the approved production quantity and the point at which a change to the specification triggers a new price or schedule.

Put this term to work. Use the 3PL selection guide to turn these operating requirements into provider checks, and the 3PL RFP guide to document evidence, responsibilities and exceptions.

Prevent avoidable rework

  1. Approve a physical sample. Photos and instructions help, but check that the finished output meets the agreed specification before the full run.
  2. Keep stock identities distinct. Map components and finished packs correctly, including pack quantities and relevant identifiers.
  3. Assign approval responsibility. Specify who can release held stock, accept substitutions or authorize rework.

A LITTLE MORE CONTEXT

Questions about Contract Packaging

Is contract packaging the same as kitting?

They can overlap. Kitting commonly groups components into a set; contract packaging can include broader packaging and repackaging work. The agreed scope is what matters.

Can a 3PL provide contract packaging?

Some can. Check the facility’s equipment, experience, controls and capacity for your specific job rather than assuming every fulfillment provider offers the same service.

Does using a co-packer guarantee product compliance?

No. Agree responsibilities and verify the capabilities, approvals and product-specific requirements relevant to the work. Outsourcing a task does not by itself establish compliance.

Source & example notes

GS1 US: Serialized Shipping Container Codes (SSCC). Explains identification of logistics units such as cases, pallets and parcels. Packaging workflows and prices on this page are illustrative; the source does not certify any provider.

Examples are illustrative. Confirm operational definitions, service scope and charges with your provider.

Last updated: · 3PL Hub

Ready to shortlist 3PLs?

Free for brands. No commissions. Your details go only to the 3PLs you match with.

Get matched to 3PLs
3PL Hub

The commission-free 3PL directory and matchmaking platform. 5,000+ 3PLs, 200+ verified members, and 3PLs never pay us to be recommended.

Taking Inventory

The 3PL newsletter, every two weeks

3PL, fulfillment, M&A, eCommerce and trade, written by a human. Read by 3,000+ operators and the logistics ecosystem.

Subscribe to Taking Inventory Free. Every two weeks. Unsubscribe any time.