Competitive Advantages of Contract Packaging

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Production teams are continuously focused on increasing the throughput of their manufacturing and converting equipment. The ROI on capital investments in new equipment is driven by increases in throughput while decreasing make-ready and change over time. Run speeds on new equipment continue to increase; however, the constraint on operations once new equipment is installed is likely finishing and packaging. By outsourcing portions or all of an operations packaging department to a contract packager, capacity is created to ‘pull’ additional throughput.Contract Packaging companies can work both ‘on-site’ and ‘off-site’. A full service firm such as Productiv will be able  to either (1) take in products to their own fulfillment centers to do final assembly and packaging or (2) work on-site by bringing in their own teams but using the client’s floorspace.Whether you are considering an off or on-site model, their are competitive advantages when partnering with a contract packaging company.5 Competitive Advantages of Partnering with a Contract Packager

  1. Increase Throughput Capacity: pallets of WIP in between the end of the line and the packaging department is a frustrating site for any operator. Contract packaging teams using lean methodology use single piece flow in order to minimize waste in WIP and create a vacuum of capacity that acts as a ‘pull’ for production.
  2. Reduce Dependence on Temporary Labor: while increases in run speed and declines in changeover reduce labor expense, the only way for packaging to keep up with production is by hiring more team members. And in many cases, this means bringing in temporary labor to serve hand assembly roles. Contract packaging teams are specialists in scheduling the appropriate workforce to match your demand and providing supervision for those teams.
  3. Lock-In Packaging Labor Costs: a good contract packaging partner will provide an upfront fixed ‘per unit’ cost. This puts the burden on scheduling and managing the packaging workforce on the contract packager - and taking it off of the local management team.
  4. Reduce Quality Errors: by relying on a contract packager as opposed to temporary employees, you get the same team members packaging your products each day. Not only does this improve their productivity, but they get to know what quality issues to look for ahead of time. Not only will the packaging quality performance remain high, but team members can also provide an extra set of eyes on product quality.
  5. Augment Local Management Team: we are constantly asking our Plant Manager, Department Manager, Supervisors, Leads and HR teams to do more with less. One of the most difficult leadership challenges is how to navigate an influx of flex temp labor. It creates stresses on all parts of the system. A contract packaging company on-site will provide supervision over their team members and will work closely with the local team to provide additional support.

So how do you get started? The first decision to make is (1) would you like to reduce the cost and burden of temporary labor. If the answer is yes - then the second big decision is (2)whether you are comfortable with sending product offsite to be packaged. If that answer is yes, then consider reaching out to a few contract packaging companies for quotes and send a small project to test their capabilities - (1) quote turnaround time, (2) project onboarding ease, (3) cost, (4) lead time and (5) quality. At Productiv, we typically are able to turn quotes around in 24 hours, we dedicate a project manager for each program or project to onboard, our cost is typically 15 - 20% lower than using temp labor, our lead times are as short as 24 hours and we warrant our quality. A good contract packager will excel in all five areas and through a solid partnership, will increase your production revenue, reduce your labor expense and offer a competitive advantage through ultra short lead times when your clients need you to jump through hoops.


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