When it comes to your supply chain and packaging line, you have two options to choose from. Doing all your packaging in-house or outsourcing to a contract packaging company. Both of these options have their pros and cons.
If I had to guess, I'd bet you are currently managing a supply chain in-house. You are weighing your options to outsource this side of your business with the hopes of saving time and money. Or, you could be a start-up trying to identify which route to take.
At Industrial Packaging we’ve helped many clients that find themselves asking this exact question.
On one hand, we can provide everything you need to run an in-house packaging line. This includes packaging machinery, packaging materials, preventative maintenance programs, automation, and a host of other items required to do in-house packaging.
On the flip side of this equation, we can outsource all these elements of your business via contract packaging. We do this with a turnkey solution that will take all the responsibilities off your plate.
Let us be clear - we’re not saying we’re the right packaging company for you. But because of our experience, we can help you to understand in-house and contract packaging so that you can choose the right option for your business.
In this article, we will compare in-house packaging to contract packaging. We will help you to identify which type of packaging operation is best for your business.
With in-house packaging, you supply the physical space to house your packaging line. You control and finance everything for the supply chain's operation. Warehousing, utilities, equipment, employee training, logistics, materials, and everything in between is under your full control.
You hire, train, and manage the labor force that operates your equipment. Additionally, you are in charge of all maintenance requirements for your packaging line. You are the sole proprietor of a fully in-house operation.
People who opt for in-house packaging have several reasons for doing so. But, the most common reason for choosing in-house packaging is having full control over the packaging line. Some people want to have full control over every aspect of their supply chain, and that is alright! However, if this is you, contract packaging is probably not a good fit.
Outsourcing your supply chain to a contract packaging vendor may save you time, money, and resources. But, you need to be able to feel comfortable with handing control to a third-party partner. For some people, this is not an option, and that is OK.
Contract packaging is the complete outsourcing of your supply chain and packaging line. It is outsourced to a third-party vendor, known as a contract packaging company. With contract packaging, your entire supply chain is managed by your third-party partner.
These elements include packaging machinery, packaging materials, logistics, labor force, automation, utilities, and all other elements required to manage your supply chain and packaging line.
People who choose contract packaging may choose to outsource for various reasons. These reasons include cost and time savings, simplification of their business, reducing warehousing space, and re-focusing on their core capabilities to produce better products in a more timely fashion.
Looking For Contract Packaging?
Running your own supply chain and packaging line has some benefits. For one thing, with in-house packaging, you are fully in control of your supply chain. And, you can manage these elements of your business as you see fit.
When you have full control of your supply chain, you get to decide how to manage your machinery, materials, warehousing space, labor-force, logistics, utilities and every other aspect in-between.In this case, you have full control to produce what you feel is the best possible packaging for your products.
In-house packaging has a much higher up-front cost. But, once you pay off your packaging equipment, you may see higher cost savings. Although, this may not be true. It depends on the machinery and materials that you run on your packaging line.
Furthermore, with in-house packaging, you have to hire, train, and manage your labor force. You may be able to see cost savings from outsourcing these items to a contract packaging company.
Contract packaging has its own set of pros and cons. Using a contract packaging company takes all the elements of managing your supply chain off your plate. Then, you can focus on your company's core capabilities.
Contract packaging can save you money in regards to packaging machinery and materials. It can also reduce the costs associated with hiring and managing a labor force.
To enter into a contract packaging agreement, you have to relinquish control of your supply chain. For many businesses, this is a non-starter.
When choosing contract packaging vs. in-house packaging, you will need to answer a few questions. This will help you figure out which option is most appropriate for your company's supply chain. These questions include:
With the information collected above, you should have everything you need. Now, you can decide if in-house or contract packaging is the best choice for your business.
When choosing between in-house and contract packaging, there are many elements to consider. If you are considering contract packaging, you will want to know how much contract packaging costs.
If you are leaning towards in-house packaging, then you will have to understand the up-front and operational costs of packaging machinery.
Once you have been able to compare the costs, pros, and cons of each type of packaging, you will be able to make a final decision on which option makes the most sense for your business.