Benefits of Working with a Contract Packager

No items found.

Today’s product manufacturing environment is extremely competitive. Consumer tastes change rapidly; competitors quickly encroach on your customer base; and manufacturing technologies are constantly changing. How does a manufacturing operation deal with all these challenges while still remaining productive and profitable?The answer: By using contract packagers and fulfillment service providers!

The Building Blocks

Like any critical contractual relationship however, taking advantage of such partnership requires certain building blocks to be in place – BEFORE you leverage the benefits:

  • Identify which specific packaging operations are worthwhile to contract out, and which ones (if any) you should strategically maintain in-house
  • Assess the capabilities that you need from your contract packager to fulfil those operational needs, including their technology, their physical facilities, manpower, certifications, and their track record
  • Select a full-service packaging contractor that you can work with
  • Agree upon specific and measurable outcomes that your contract packaging service provider must deliver
  • Work out a Joint Service Agreement (JSA) that makes a successful outcome the joint responsibility
  • Don’t just “relegate and forget”. Instead, most successful contractual relationships come out of a “delegate and support” model

The goal is to capture the benefits from a contract packager relationship by making it a collaborative initiative. To that objective, you must acknowledge that contract packagers can be strategic PARTNERS, and not just useful SUPPLIERS. By approaching the relationship as a partnership, you’ll ensure that your contractor also contributes to the profitability and longevity of the association.

Leveraging Contract Packager Synergies

So, how exactly can you capture the benefits from working with a contract packager, and what synergies would you expect to unlock from such a relationship? There are multiple benefits that contract packaging relationships offer to manufacturers and distributors alike, including:

  1. Cost predictability: Contract packagers specialize in delivering a unique set of services to their clients. As a result of their specialization, they are able to guarantee their services at specified fixed rates. This certainty of packaging expenses can help you (the manufacturer) plan your own budgets and margins with a greater degree of certainty than if you internalized those packaging services
  2. Operational flexibility: When your business is faced with an unexpected order or unusually higher than normal production volumes, leveraging contract packagers to outsource some of that spill-over capacity gives you more operational flexibility. Now, because of your contractual relationship, you won’t have to decline a clients’ order – which they (your client) might otherwise move to a competitor
  3. Labor planning and management: For most manufacturers and distributors, salaries and wages are one of the major manufacturing costs within the production chain. By outsourcing packaging operations to a contract packager, you not only divest the associated costs but also the operational stress and hassle of managing a larger than necessary workforce

These three benefits alone will make it worthwhile to explore using the services of a contract packager. However, other synergies like specialization, distribution networks, kitting and assembly, innovation and diversification add to the business case for using outsourced packaging services.


Related Content

July 19, 2024

Problem and Solution: Leveraging Kitting and Assembly Services in the Modern Supply Chain

To address (supply chain) challenges, many businesses are turning to innovative strategies, including kitting and assembly … (to) improve inventory management and increase (their) ability to adapt to change in a volatile market.

June 27, 2024

Changing Tides: Kitting and Assembly Services in the Modern Supply Chain

Market trends and the need to drive greater supply chain efficiency are leading more companies to look for a strong kitting and assembly services partner.

What We Do


Warehousing & 3PL Solutions


Value-Added Services


Client Embed Programs

Subscribe to Updates

Get ideas on how to delight your customers with delivery on their timeline.

You've been subscribed to receive updates!
Oops! Something went wrong while submitting the form.


How to bring efficiency to your operations with Productiv