Packaging, warehousing and shipping products can be a costly business, cutting into profit margins and detracting from your core business. Rather than paying the overhead and variable costs of setting up packaging lines, adding supervision and manpower management, many companies have determined long term that by outsourcing to industry specialists your company can focus on what it is you do best and take advantage of the economy of scale offered by contract packaging companies. Contract packaging companies provide improved operational efficiency by concentrating their investments and resources on world-class labor, capital equipment, capacity and environmental controls to be an excellent co-packing partner for many different companies. Thru outsourcing you can us focus on your core business and have someone else deal with the pesky peaks and valleys of production demands.
These tips will help your company get the most out of working with a contract packaging company which will lead to more flexibility, faster turnaround leading to increasing profits and lower overhead for your company.
Clarify Assembly & Packaging Needs
Every good product is unique and you want yours to stay that way. Quality packaging ensures that your product arrives intact, airtight and attractive. Professional and experienced outside contract packaging and fulfillment companies can assemble and ship a variety of products to your specifications at a reduced overall cost. Also, contract packaging and fulfillment companies are knowledgeable about the variety of assembly and filling as well as the back end logistics available and the requirements associated with different product lines, making them a valuable resource in determining the best methods for handling specific projects.
Identify Inventory Volume
There is no cost advantage to processing products one at a time. To make the most of a business relationship with a contract packaging and fulfillment company, be sure you have solid information regarding the expected volume of each product line that will require assembly and shipping, as well as specific assembly instructions. This will allow you to select and better communicate with your contract packaging company and get a more accurate cost estimate.
Responsive communication is critical when dealing with a contract packaging company. Un-returned phone calls and unmet deadlines can be detrimental to your company’s reputation and profits. Be sure to create a strong working relationship with your contract packaging company to eliminate these delivery hurdles. Your contract packaging company should be responsive and accessible, and considered an extension of your business.
Understand Warehouse & Distribution Capabilities
To fully realize the economies of scale offered by the best contract packaging companies, it is important to ensure that they have the back-end fulfillment capabilities and know how to handle the drop shipping of the finished goods. Daily deliveries of inventory cost more than weekly deliveries. If a contract packaging company has adequate warehouse & distribution capabilities you will be able to collaborate with them with the goal of reducing the cost to deliver your goods. For better reference, each fulfillment project is unique and custom and is typically quoted based on but not limited to the following criteria:
- Number of pallets to be stored per month
- Number of turns (how many times the number of stored pallets is repeated over 12 months
- Number of SKU’s (unique part numbers) that need to be handled
- Number of Pick and pack orders per day/week/month
- What does average order look like? Number of total units? Number of unique SKU’s per order?
- Method that orders ship out? (TL, LTL, UPS, USPS)
- What account number items are to be shipped against
- Additional packaging required
- Length of program
- Start date of program
- Drop shipping requirements
- Turnaround requirements
The best way to fully understand your own packaging, inventory management and shipping needs is to consult with an experienced outside contract packaging and fulfillment company who can help guide you and meet the custom needs of your project.