Contract Services: Search for the Right Partner
When shopping for packaging, manufacturing, and private- label help, press providers for service, reliability, and quality.
by John ConroyAsk Tony Nugent the attributes a customer should expect from a contract services provider, and he answers in the time it takes to open a tube of lip gloss.
“Service, reliability, quality, speed to market, flexibility,” replies the vice president of DMI (Wharton, NJ), a manufacturer, filler, and packager of cosmetics and OTC pharmaceuticals.
It’s a sales mantra shared by DMI’s counterparts in a private-label and contract services industry made up of turnkey companies such as DMI, label suppliers, and packaging specialists. These qualities are required to meet the needs of clients looking for fresh, inventive products in a rapidly changing, competitive marketplace that encompasses start-ups and established retail giants.
And are costs a concern? “Always!” Nugent responds with a laugh. In recent years, pocketbook worries have led some customers to transfer their business from U.S.-based service providers to companies in China, India, and other Asian countries. However, domestic suppliers have seen some of that business return over matters of quality and delivery times, say several contractors.
Certainly, the search for a compatible business partner can prove daunting. “It is a very fast-paced marketplace today, and customers are looking [down] every avenue to save time in order to get to the marketplace faster than their competition,” says Howard Thau, president of Sonic Packaging Industries Inc. (Westwood, NJ).
Sonic Packaging’s client base focuses on new product introductions, line extensions, and creative delivery systems, Thau says, with the “true cosmetics end” of the business the most demanding part of his company’s overall sales. “Today’s treatment products and many of the high-end cosmetic customers really play by the rules of the pharmaceutical industry,” he points out. Firms such as Sonic, DMI, and others have FDA registration, a designation that gives clients a certain comfort level, Nugent adds.
For instance, Thau says a perfect example of the competitive pressures felt by clients with products for treating skin problems such as wrinkles and scars is the need for compatibility and stability tests. “Ideally, you’re going to need to do compatibility and stability tests to ensure there are no negative interactions between the packaging materials and the product,” he explains. Customers examine the process at 30, 60, and 90 days and are often required to make an educated guess of how product and packaging materials are going to meet their long-term requirements. The key, Thau notes, is to take care of as much of the “up-front work” as possible “so that when the testing is complete, the project can proceed as planned.”
Customers are looking for a high level of experience from their vendors, Sonic’s chief executive asserts. Vendors that already have a good idea which “type of material will work with different applications” can save their customers precious time. “You will still need to conduct the tests,” Thau emphasizes.
A high level of expertise certainly helps when frantic clients call with last-minute requests, says Pat Campbell, executive vice president of Coughlan Products (Wayne, NJ). The private-label manufacturer of exfoliating scrubs, bath powders, and related anhydrous bath and body products often receives calls “at the 11th hour.” The fretting customer has been working both externally and internally on a product launch, only to find that “stability failed and package compatibility is not working,” she says.
“The caller says something like, ‘We only have a month and a half to market, can you help us?’” Campbell says. “Many times, that’s how a customer comes on. We bail them out, and the next time they come back to us and say, ‘Hey, you did a good job.’ ”
Regarding production expertise, Campbell cites a recent example of a “prestige beauty manufacturer” with its own in-house R&D that had been trying to develop “a lightly colored dry product that turned the water an entirely different color” when added to the bath. Coughlan took on the challenge after both the client’s in-house departments and other contractors failed. “Within a six-month development and testing period, we delivered a product that exceeded expectations in technical performance as well as consumer sales,” Campbell says.
Not every job leads to a long-term commitment. Contract service providers may examine the long-term potential before taking on a new client. Charles Bridge, president of Packaging Associates (Randolph, NJ), says the company has indeed turned down business. The projects aren’t necessarily difficult, notes Bridge, whose company works with major closure, bottle, and tube manufacturers. It’s just that their learning curves may be too extensive for “a one-time-only job.” Potential clients such as these are “usually not willing to pay all the up-front costs.” As a result, says Bridge, “we’re not willing to spend all that time and money, either, if it’s going to be a ‘one-and-done’ type of deal.”
Campbell says Coughlan Products receives small-batch inquiries from clients currently working out of their kitchens or garages. “We do get a few of those,” she notes. “Often, they can’t meet our minimums.” The supplier’s primary concerns with small customers are ensuring that the batch size is large enough and that equipment and workers are used for at least one day of production. The smallest run might be 2500 scrubs, minimum.
The ideal client? “For us, it’s definitely a product that’s an ongoing item,” Campbell replies.
Packaging Associates helped silk-screen and hot stamp these oval closures for client Frédéric Fekkai.
Just as often, though, challenges lead to a shining success story. “We pride ourselves on taking those decorating challenges that either the manufacturers don’t want to do themselves or that other decorators will shy away from,” Bridge says. Packaging Associates’ recent hit is a Frédéric Fekkai package that combines a silk screen and hot stamping on an oval closure. “You’ve got to silk-screen all the parts first, and you have to have the confidence that everything that’s silk-screened is in registration, because if you’ve got to hot stamp and the silk screen isn’t in registration, all those parts are wasted for ourselves and our customer. It’s a sizeable amount of money.”
Labeling specialist Pro-Motion Industries (Hammonton, NJ) sees many companies with new product launches, says Rob Hodgson, general manager. These clients typically don’t have metrics such as projected production numbers or annual sales figures, and they don’t want to invest the capital for in-house production.
The Frédéric Fekkai caps created by Packaging Associates.
Many companies don’t have their own products and farm out the work to three or four vendors for filling, capping, and a range of different services, Hodgson notes. As a result, Pro-Motion often works with other suppliers “to make sure that the product that we’re being handed to decorate has what the customer is going to need as far as the end look.”
Although Pro-Motion often works with clients from the beginning of a line, many times “we just get handed stuff,” Hodgson says. “Somebody messed up the project, and we’re asked, ‘Can you make this work?’ There are a lot of times that projects will get designed incorrectly, and label materials and components don’t match.” The fairly short lead times don’t hamper the company, which can usually “be up and running within one to three days,” Hodgson says. The large equipment inventory allows him “to configure my machinery to do just about anything by taking this component and that component and slapping them together.”
Beauty product companies can avoid these aforementioned snafus by working with the contractor from the start to define package requirements. After defining primary package needs, the client and supplier should then look into secondary packages, says one packaging provider. In the case of a folding carton, consider “whether the customer’s going to supply it or whether you’re going to supply it.”
Fueled by cost savings, the recent trend to using overseas contractors points out this need for “definability,” this provider says. He emphasizes that his company’s relationships with its suppliers in China have been satisfactory, primarily because he has kept the business dealings within “definable parameters.”
“Communication has always been an issue because they’re half a world away,” the provider continues. Working with Chinese suppliers runs more smoothly “as long as you have a definable parameter.” A perfect example is a box measuring 6 × 8 × 2 in. deep. “A measurement is a measurement, no matter where you are in the world,” he points out. Quality parameters must be outlined “when every piece has to be identical, depending on who you work with and where in the world [production is done]. It may not be as close to good enough in some locations.”
Sonic Packaging’s Thau says that the migration to overseas suppliers has hit components suppliers more than others. Campbell and Hodgson, however, note that clients have had communications, shipping, and quality problems that have prompted them to return stateside.
“What we’ve found particularly in the last 12 months is an increase in the number of people who are just. . . not dealing with China anymore,” says Campbell.
“We have had a couple of jobs that we have lost to China,” Hodgson admits. “They, quite honestly, come back. The complaints I’m hearing are. . . they’re just not getting the high-end quality and. . . turnaround times are not what they’re looking for as well.”
The comments merely confirm the importance of Nugent’s belief in the service provider’s service-reliability-quality mantra.