What is co-manufacturing or third-party manufacturing?


Co-manufacturing is the abbreviation for “Contract Manufacturing”, that is when a particular product’s manufacture is carried out by a third-party supplier, whether it’s in the process as a whole or just for a part of it. For instance, it may occur that only outsourcing the packaging might be considered, through what we call the co-packing process.

Why use co-manufacturing and co-packing?

The main reason to outsource products and/or packaging is to be able to allocate resources in the best possible way, and thus focus on the company’s core business, research and development, design, marketing and sales strategies.

What type of companies use co-manufacturing?

Companies of all sizes and segments can use co-manufacturing to optimize their processes. Among the main segments to use this model, the CPG sector, including food and beverages, cosmetics, cleaning and hygiene products, and even certain pharmaceutical products can be added to the list.

Currently, GrowinCo. helps big CPG companies to connect with suppliers (as we will see throughout this text), namely: Mondelez, Kellogg’s, Herbalife Nutrition, Natura, L’Oréal, Kraft Heinz, FIFCO and so do many other companies that find it necessary to outsource within their production processes.

What are the benefits of third-party manufacturing for CPG industries?

The fast-moving consumer goods industries are very volatile, there are several factors that influence the sector, such as: inflation, logistical challenges, commodity prices and by the fact that they live in the midst of great competitiveness. This is where co-manufacturing emerges as an alternative for:

  • CPG industries’ Cost reduction and increased competitiveness:

In addition to the savings in labor costs, outsourcing allows companies to save by not having to financially invest in facilities, since imported products are often needed to compose the industrial park. Besides, it’s common for factories that specialize in outsourcing to achieve reduced raw material costs and, consequently, reduce the price of the final product;

  • Increased productivity:

Co-manufacturing helps companies allocate resources to what really matters, thus streamlining production and optimizing production time for faster launches.

Check out some data on how GrowinCo. boosts a company’s productivity:

  1. Speed increase in Time-to-market: 40%;
  2. Database of qualified suppliers: 85,000 companies;
  3. Average reach within user companies :+25 integrated key departments.
  • Sustainability and new forms of consumption:

In order to adapt to a given market, a business often need to change their production system, when aiming the previously required specifications, whether it’s about sustainability or even for new forms of consumption, such as: vegan food, automated or artificial intelligence products, clean energy and healthier foods. Thus, outsourcing allows the company to be able to develop products with the quality and specifications demanded by the consumers into the new market.

How does GrowinCo. help CPG companies?

GrowinCo. has an intuitive platform for CPG companies to connect with suppliers. The functionalities include:

  • Prospect suppliers for co-manufacturing:
  • Post your B2B challenges with new product development projects or material sourcing, and XGrowth will find the most suitable suppliers for you.
  • Confidentiality agreements
  • Centralize non-disclosure agreements – plus all confidential content – in a safe and organized digital environment.
  • Management of supplier proposals
  • Manage all of your project’s proposed solutions from your suppliers in just on place. Give quick feedback and rate them according to your needs.

Check the step-by-step process to find the best co-manufacturing solution for your company:

  1. Enter the GrowinCo. platform
  2. Create a project that includes your needs, such as: estimated budget, Incoterms, details and peculiarities of the project;
  3. Current and new suppliers can receive those demands and evaluate them;
  4. All data will be safe through Non-Disclosure-Agreements, also called NDAs;
  5. Suppliers analyze and include their proposals in the platform, stating whether the cost reduction project is feasible;
  6. The company chooses the one that best suits its current needs.
  7. Companies are connected!

Join GrowinCo. and do what all the major CPG companies are doing!

Request a demo now to get to know the largest third-party manufacturing ecosystem available in the market.

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