Contract Packaging vs. Packaging In-House: Which One’s Better?

Sample packaging is essential when you’re a company launching new products to your consumers.

You might be a new entrant or even a well-established business either way you need a packaging plan which will be the most efficient in the road to achievement. 

Contract Packaging vs. Packaging In-House

  1. Contract packing: This involves using a contract packager that is expertise in packaging and has many years of experience doing so. If you’re looking to introduce your product into the market, mini packs are the go-to, in order to make your consumers aware of your product.  
  2. Automation packaging in house: This involves spending a large sum of capital on packaging equipment and taking the packaging process in your hands. 

Contract packaging should be considered if:

1. Lack of specialized workforce or equipment for packaging:

If the workforce is not skilled enough, they may not do the job efficiently. This in term will result in the cost of production rising for your company. Hence, it will be better for your company to outsource their packaging to those that are specialized in this area. 

2. The cost of in-house packaging higher than contract packaging:

In order to implement in-house packaging, costly equipment may need to be purchased. A business may not always have the ability to finance such costs. Additionally, there may be maintenance cost included which in term can increase cost even further. Contract packaging will be much cheaper than investing in expensive equipment and the skilled workers required using them.

3. Separated facilities geographically:

This could help distribute to a wider market and help your company reach more customers.

4. Product experiences a reduction in cost per unit in bulk packaging:

When bought in bulk your company might receive a discount which may help reduce the average cost and generate more income.

5. No to less warehouse space:

Often times new businesses do not have space to expand their capacity. Contract packaging could act as a warehouse during the time of packaging which may allow the business to increase production as well as reduce warehousing cost.

6. Firm is downsizing:

In times of economic recession or during tough times, employees may need to be made redundant in order to minimize cost. Contract packaging may be less costly than hiring specialized workers which might help to keep the cost low. 

7. Funds:

A firm may not have the structure or funds available to purchase capital equipment required for in house printing. Furthermore, additional facilities such as spare capacity may be vital for in-house packaging which might also require a firm to buy more land. 

8. Experience:

Contract packaging companies have usually been operating for years. Their employees are well aware of the process, thus, they may be better at packaging than you and save you from inquiring about additional wastage expenses. 

9. Quality assurance:

Packaging companies comply with strict quality international standards that relate to the packaging of consumer goods. All their processes mostly are certified and regularly inspected.

10. Brand loyalty:

Their high quality of packaging ensures customers to come back and hand them out better deals. Some may even have a list of clients that are well known.

11. Designs:

Their designs may include sachet packaging as a trial such as single sachets, twin sachets, stick pack sachets, and many more materials to choose from. They may also have gloss or matt finishing and metallic printing as an option. 

12. Transportation and graphic data services:

Contract packaging companies may offer affordable transportation services to ship bulk products to them or back. They may also provide graphic data if you wish for sachet printing

13. Affordable:

In many parts of the world, the workforce may be highly skilled and the cost of production is relatively low allowing packaging companies to charge reasonable prices to their customers.

Reasons to implement in house packaging:

1. Integration:

If the company wishes to incorporate supply chains under one roof with the management group, in house packaging is the way to go.

2. Desiring full control:

If the company wants to directly manage the whole production process internally, this allows expansion for the business. 

3. Experienced and efficient staff:

If the employees are skillful enough, the cost of packaging could be minimized for the company as skillful staff may package in less time but cover more output. 

4. Low cost of transportation:

By not outsourcing companies can be saving on cost resulting from shipping and handling which can be quite expensive when more frequent and long distances have to be covered. 

5. A strong core product line:

If the products are similar, it may require little specialization which may be costly if outsourced. 

6. Decline in cost:

Even though the initial cost of equipment may be very high, after the purchase, the cost may start to decline if the equipment is well maintained.

Alongside, there may be tax incentives attached with depreciating capital equipment which may help your company experience a decline in average cost.

Final Thoughts

What you think is better can only be based on the situation and the conditions your business is currently dwelling in. Both choices contain benefits and drawbacks. This decision must be properly assessed on the circumstance of your business. 

One way you can recognize which one is best fitted for your applications is to get in touch with a reliable packaging company, which can make the finest recommendation based on your business’s needs.

However, if you’re still confused about Contract packaging, there is still a way to find out if you want to take it up.

Packaging samples are often freely provided by contract packaging companies to their business partners in order to prove how serious they are about their quality.  Their reference partners may represent greatly regarding their reliability.

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