By: Nathan Dube on March 2nd, 2021
Contract Packaging: Top 5 Reasons To Outsource Your Supply Chain
Over the past few weeks, you have been doing research about contract packaging. You have noticed other companies in your industry have outsourced their supply chain. They have done this with a contract packaging company.
You find yourself wondering if contract packaging could benefit your own company. But, you are not clear on what the benefits of contract packaging are. Do they make sense for your business?
Now, you find yourself here on the Industrial Packaging website. You are perusing blog posts and webpages about contract packaging. You see that we have been providing contract packaging services for many years. In some cases, to Fortune 500 companies.
With the information found here, you will be able to decide if contract packaging is right for your business. And, while Industrial Packaging would love to gain your contract packaging business, we may or may not be the best vendor for you. Regardless, with the information available on our blog, we will be able to help you identify the right contract packaging vendor for your company, even if it is not us.
In this article, we will review the top 5 benefits of contract packaging. This will help you identify if contract packaging is right for you or not.
1. Contract Packaging Can Save You Money
It's a gas.
Grab that cash with both hands and make a stash.
New car, caviar, four-star daydream.
Think I'll buy me a football team."
You will have to forgive the Pink Floyd reference. But, let's face it, we all want to save some coin. When it comes to contract packaging, it may very well do that for your business. It is one of the main reasons many companies opt for contract packaging!
Running your packaging line and supply chain is not cheap. It can be downright expensive! Packaging machinery, labor, materials, logistics, and warehousing can rack up a huge bill. Doing all of this yourself will run you between $150,000 - $300,000. And, that is just the capital required to get you started!
When you outsource your supply chain management to a contract packaging company you do not have to foot the bill because we already have the capabilities in place to manage these aspects of your business.
With a contract packaging agreement, you can outsource all these elements. Then, you can focus on what your company does best.
But, how much does contract packaging cost? That is a great question, and the one most people have right off the bat. The truth is, the answer to this question is very case sensitive. It is based upon the cost of all the elements mentioned above.
Calculate your price per unit. Then, you can generate a close approximation for what contract packaging will cost.
"Generally speaking, if you can leverage a high-speed filling line that requires only a few touch-points, you are in the $.05-$0.15 per unit mark.
If you have a very manual, bulky, complex point of purchase display, your cost could be over $100 per unit. If you are somewhere in the middle, the good news here is you will be closer to the lower end than the higher."
Once you have calculated your price per unit, you can generate a close approximation for what contract packaging will cost your business.
You can then compare the cost of contract packaging to running your own packaging line. Often, you can save a lot of money by outsourcing your supply chain and packaging line.
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2. Contract Packaging Can Save You Time
As the old saying goes, "time is money." And so, saving time saves you money, am I right?
Look at all the elements that go into running a packaging line and supply chain. By doing this, it becomes evident that it is costly to build, run and maintain such an operation.
- First, you have to figure out if you have the budget for all the necessary elements of a packaging line.
- Next, you have to find, buy, and prepare the appropriate warehousing space to build your packaging line.
- Then, there is the purchase, installation, maintenance, and upgrading of packaging machinery.
- Finally, you have the hiring, training, and management of a labor force.
Contract packaging can cut down your lead times by a matter of weeks because we already have the infrastructure in place to manage these items. Additionally, the installation, operation, preventative maintenance, and training on your equipment are all handled by your contract packaging partner.
If you were to attempt to manage all of these things in-house, you would likely need to hire a manager who would be working at least 40 hours per week. To reiterate, bringing all of these items in-house will cost you around $150,000 - $300,000 just to get started.
Once you have all these items set up and running, you have to track your key performance indicators. Then, you must continually optimize each one for continued improvement. Finally, you have to have a plan in place to negate or reduce unexpected downtime.
What about your geographical location? Is your operation optimized to deal with severe weather events? If some unexpected event does occur, how much downtime can you afford before it starts to cost you big bucks?
Does this all sound like a time-consuming set of unwanted headaches? Well, getting all this off your plate is one of the main reasons people choose to use contract packaging.
3. Contract Packaging Allows You To Focus On What You Do Best
Are you a packaging company? If I had to guess, I would assume, probably not.
Do you want to focus on making and selling your products? If you were not spending so much time and money on running a packaging line, then you could!
What would that look like? Higher productivity? Better quality? Faster speed to market? Or maybe, more time spent with your family and friends? Higher pay for your employees? A better company culture?
The sky is the limit. A contract packaging company can take all this supply chain stuff off your plate. This way, you can focus on what you do best.
4. Contract Packaging Increases Your Productivity
When you hand all of the elements of your business mentioned above to a contract packaging company, you can focus on your core capabilities.
Without having to dedicate funding, training, machinery, materials, and infrastructure to managing your supply chain, you can focus on doing what you do best. All while doing it in a timely fashion.
That means you can spend more time and money on designing, developing, producing, and perfecting your products and services. It means that you can re-focus on being the most productive company in your industry. This will result in better quality products, faster speed to market, and higher productivity for your business.
5. Contract Packaging Gives You Peace Of Mind
When you hire a contract packaging company, you no longer have to concern yourself with packaging, logistics, and the supply chain dynamics of your business.
You can call your contract packaging vendor from the beach. Within a short period, you can ensure that every piece of the packaging puzzle is being taken care of. You can rest easy knowing a specialized expert manages everything.
Can you put a price on peace of mind? Well, with contract packaging, the answer is yes! And, luckily for you, most likely, that price won't break the bank.
Where Can You Learn More About Contract Packaging?
By now, it looks like I have piqued your interest in contract packaging services. Are you ready to take the next step in the process of partnering with a contract packaging vendor to outsource your supply chain? If so, one of the first things you will want to figure out is, how much does contract packaging cost?
The answer to this question is not cut and dry. Every company's contract packaging costs will be different from the next. In order to figure out how much contract packaging will cost your business, you will have to calculate your price per unit in addition to the other items mentioned in the article linked above.
About Nathan Dube
As the Digital Marketing Specialist at Industrial Packaging, I am honored to create content for such a phenomenal company and work with one of the greatest teams in the Packaging Industry. Whether creating a video, writing blog posts or generating other pieces of content and multimedia, I am always excited to help educate and inspire our prospects and clients to reach their highest potential in regards to their packaging processes and needs.