How do I review a co-packer’s ingredient ordering and minimum run sizes?

Begin with purchasing. Ask for recent purchase orders and supplier invoices, and see whether the co-packer orders for a single client’s run or buys in bulk and splits it. Find out who owns ingredients that a client supplies and who owns the ones the co-packer buys. Leftovers and expired stock are where disputes usually start, so ask how they were handled last time.

Next, look at minimum run sizes. A minimum protects the plant’s efficiency, but a seller who waives it for favoured clients may be hiding thin margins. Ask how often smaller runs are accepted, whether clients are charged for changeovers and cleaning, and whether the minimums are written in the contract or only understood.

Then consider the consequences for you. If a few ingredients come from a single supplier, a shortage can stop production. Ask how the plant tracks lots and expiry dates, since that links to food safety. Your accountant can help you see what ingredient purchasing does to cash flow, and your lawyer can explain the contract terms. Ask what happens when a client cancels a run after ingredients have already arrived, because that answer shows who really carries the risk day to day.

Key takeaways

• Ask who owns the ingredients and who absorbs the waste.
• Compare written minimum run sizes with what the plant actually accepts.
• Check lot and expiry tracking, since it affects both cost and food safety.