Co-Packer Workflows

MakeUpdated August 26, 2026 · Reviewed by Peasy Team

A co-packer (or co-manufacturer) is a third-party that produces finished goods for you. Peasy supports the two most common arrangements: you ship raw materials to the co-packer, or the co-packer sources everything themselves. The setup is similar in both cases — the difference is whether your raw materials are tracked through the production run.

Add the Co-Packer as a Vendor

Either model starts the same way: add the co-packer as a vendor so you can purchase from them.

  1. Go to Buy > Vendors.
  2. Click + New Vendor.
  3. Enter the co-packer's name and contact info.
  4. Save.

If you also want to track inventory that's physically at the co-packer's facility (raw materials you've shipped, or finished goods waiting to ship to you), create a location for them too:

  1. Go to Configure > Locations.
  2. Click + New Location.
  3. Name it after the co-packer (e.g., "Acme Co-Pack").

A co-packer location works like any other location — Peasy doesn't have a special "co-packer" location type. Treat it as a regular warehouse for transfer and inventory purposes.

Model 1: You Ship Raw Materials to the Co-Packer

Use this when you buy ingredients and packaging yourself and send them to the co-packer to assemble.

1. Build the Production Template

Set up a template that lists every raw material and packaging component the co-packer uses, plus the finished good as the output. This is what tells Peasy how much to deduct.

2. Transfer Raw Materials to the Co-Packer's Location

If you set up a co-packer location, create a transfer order to move the raw materials from your warehouse to the co-packer's location when you ship them. Now your inventory shows what's physically at the co-packer.

3. Create a Work Order at the Co-Packer's Location

When you're ready to schedule the run, create a work order from the template. Set the Location to the co-packer's location so the deductions and additions both happen there.

You can also use the Co-Manufacturer Cost Basis field on the template to capture the labor cost the co-packer charges you per unit or per batch. See Co-Manufacturer Cost Basis.

4. Complete the Work Order When Finished Goods Arrive

When the co-packer ships you finished goods, mark the work order Complete. This deducts the raw materials from the co-packer's location and adds the finished goods.

If you want the finished goods at your warehouse instead of the co-packer location, follow the work order completion with a transfer back, or set the work order's Output Location to your warehouse before completing.

5. Capture the Co-Packer's Invoice as a Bill

When the invoice arrives, log it as a bill against the co-packer vendor. This keeps your spend tracked and lets you sync to QuickBooks if you're connected.

Model 2: The Co-Packer Sources All Materials

Use this when the co-packer buys their own ingredients and packaging — you only see the finished good. Peasy treats this much like buying any other finished good.

1. Build a Co-Manufacturer Template

Create a template for the finished good and use the Co-Manufacturer Cost Basis field to record what the co-packer charges per unit (or per batch). You can leave the inputs list empty since you don't track the co-packer's own materials.

2. Add to Cart and Send a PO

When you create a work order from a co-manufacturer template, the dialog's primary button changes to Add to Cart. Peasy adds the make-item to your shared cart at the co-packer's price so you can send it on a purchase order. See Co-Manufacturer Templates Add to Cart.

In the cart, the co-manufacturer's group shows a Work Order card with two fields: a production date and a manufacturing location. Peasy creates a draft work order with these values when you submit the PO, so the work order is scheduled at the right place from day one. The manufacturing location defaults to the location row associated with the co-packer vendor (if you've set one up under Configure > Locations), otherwise to your entity's default location. The production date is optional — leave it blank if you don't have a target date yet.

If the saved manufacturing location is inactive, the card shows a red warning and asks you to choose an active location. The same warning appears on an open work order that still points to an inactive location, with the location field available so you can correct it.

Peasy also creates the linked draft work order when a co-manufactured line is added through a manual PO or an RFQ conversion. Each purchase line gets its own work order, even when the same finished item appears more than once on the PO.

If the same co-manufactured item needs separate lines — for example, two production runs that should have separate work orders — create the PO with the first line, then open the PO and click Add item for each additional run. Select the same item again, enter that run's quantity and unit price, then click Save Changes. The New PO screen and cart select an item once, but the PO detail view keeps each added line separate and creates one linked work order for each line.

On multi-location accounts the Create Work Order modal also shows a Receive Location field. Use it to pick where finished goods land when the shipment arrives. It defaults to the manufacturing location.

You can also order a co-manufacturer item straight from Buy > Items: hover the item's row and click the cart icon. Because a co-packer produces in batches, the popover gives you a Batch field alongside the finished-unit field — enter however you think about the order. If you type a number of batches, Peasy multiplies by the template's yield and puts the finished-unit amount on the order, so your co-packer always sees an explicit quantity (for example, 2 batches becomes 200 jars) rather than a batch count they might misread.

3. Receive Finished Goods Against the PO

When the shipment arrives, receive the PO to add the finished goods to inventory. Peasy shows the finished product's SKU with an Output SKU badge on the Items and Receive pages, so the purchasing make-item does not hide which finished item is arriving. Enter a finished-goods lot ID at receive time so you keep traceability.

If the linked work order includes raw-material inputs, Receive & mark done is also where you record the ingredient lots the co-packer used:

  1. Enter the delivered quantity and finished-goods Lot ID on the Receive panel.
  2. Click Receive & mark done to open the Mark as done dialog.
  3. Review each ingredient's Qty used, then use Lot to select an existing raw-material lot or choose Add Lot.
  4. If one ingredient came from more than one lot, use the split button at the right of that ingredient to add an Additional lot row.
  5. Review Qty Accepted and the finished-goods Lot Number, then click Mark as Done.

The ingredient Lot fields and the finished-goods Lot Number are separate. Recording only the finished-goods lot does not identify which raw-material lots went into the run.

4. Capture the Bill

Log the co-packer's invoice as a bill. Same pattern as Model 1.

5. Add Separately Billed Freight to the Work Order

If freight is billed separately from the co-packer's production invoice — for example, the co-packer ships finished goods directly to a 3PL and the freight charge arrives on its own bill — add that freight as an Additional Batch Cost on the linked work order.

  1. Open the linked work order from Make > Work Orders or from the PO's work order link.
  2. In the right Details panel, expand Additional Batch Costs.
  3. Click Add Cost.
  4. Name the cost something clear, such as "Freight to 3PL."
  5. Enter the total freight amount for that production run.
  6. Save the cost, then complete the work order through the receive flow when the shipment arrives.

This keeps the freight with the finished goods batch so it can roll into that run's total cost and cost per unit. You can still enter the freight bill in Peasy for accounts payable and QuickBooks sync; Add Cost is what ties the amount to the production batch's COGS. Add the cost before completing the work order, because completed work orders are historical records and do not show Add Cost for new cost lines.

Lot Traceability Through a Co-Packer

Both models preserve lot tracking:

  • Model 1 — In the Mark as done dialog, select the raw-material lot for each ingredient used. Peasy records those consumed lots and ties them to the finished-goods lot, preserving forward and backward traceability.
  • Model 2 — Lot tracking starts at the receive step. The co-packer's internal materials aren't tracked in Peasy, but the finished-goods lot you assign at receive time gives you traceability from there forward.

Ask your co-packer to print or label finished goods with the lot ID you assign — that way the lot in Peasy matches the lot on the case.

Good to Know

  • You don't need a co-packer location. If you don't care about tracking what's physically at the co-packer's facility, skip the location and just use your own warehouse for the work order. The finished goods will appear there when the work order completes.
  • Templates are reusable across co-packers. If two co-packers make the same product, you can use the same template and pick a different vendor at PO time.
  • Cost rolls into COGS. Include in COGS is on by default for co-manufacturer templates. Turn it off if you do not want that labor cost included in your unit cost calculation. See COGS.

Related

Was this article helpful?