Let’s face it: consumers are rocking the packaging world. Their rapidly changing tastes and preferences for “micro” targeted products have added complexity to many packaging operations. This trend and others signal that it’s time to rethink operational strategies to maintain or improve margins.
Where to start?
Paramount to a revised strategy is determining where you and your team add the most value for your customers. Like most packaging ops leaders, your time is likely best spent on strategic initiatives that aim to retain current customers and attract new ones. With this in mind, your next focus should be to outsource non-core production to a contract packager and/or fulfillment service provider. These partners can create the time and space you need to shift from reactive to proactive and from value-neutral to value-add, which is a very important long-term play.
The Building Blocks
The best contract packaging partnerships begin with shared clarity, and end with your business goals met or exceeded. Here are some building blocks to lay the foundation for success:
- Identify which specific packaging operations could be carved into a standalone module for a contract packaging partner
- Determine whether you would want a partner to work onsite, or to send your materials to their fulfillment center
- Assess the capabilities that you need from your contract packager including their technology, facilities, manpower, certifications, and track record -- they may even have complementary capabilities that boost your value
- Agree upon specific and measurable outcomes that your contract packaging service provider must deliver
Most of all, make sure your new contract packaging partner is collaborative, will contribute to your profitability, and will be a strategic asset long-term.
Capture Benefits through Synergies
There are many benefits contract packagers offer manufacturers such as:
- Cost predictability: Contract packagers specialize in delivering unique services that they can guarantee at fixed rates. This certainty of expense helps manufacturers budget better, and achieve margins with greater certainty. No overtime, no temp labor expense, and no cost overruns.
- Operational flexibility: Using contract packagers for spill-over work keeps customers happy and deters them from approaching your competitors. During times of growth, seasonality or other surge demands, you can confidently meet requirements with a more flexible operation.
- Labor planning and workforce management:For most manufacturing companies, payroll is one of the largest expenses. By outsourcing to a contract packager, ops leaders can divest these expenses as well as the stress of managing a larger-than-necessary workforce.
These three benefits alone are compelling reasons to explore partnering with a contract packager. Other synergies like specialization, kitting and assembly, distribution networks, innovation and diversification also add to the business benefit of using outsourced packaging services. As you work to stay ahead of manufacturing trends, consider using a contract packaging partner to galvanize your value-add for customers.
