Your company may choose to outsource certain manufacturing functions to a contract packaging partner for some or all of the reasons listed below. If managing a contract packaging supply chain is part of your day-to-day job or part of your overall business strategy, you may find that achieving the desired benefits may still require significant time, cost, and resources on the part of your organization while having a serious environmental impact.
Reasons Companies Outsource:
• Reduce and control costs of operation
• Increase focus on company’s core functions
• Free up resources for other projects
• Reduce the numbers of suppliers and POs
• Sharing risk with a partner
The example below exhibits how a U.S.-based manufacturer shipped their main component to an overseas contract packaging company. The finished goods were then returned to a distribution center in TN under their “old model” totaling over 109,642 miles of transportation annually. By re-shoring to a U.S.-based contract packager in their “new model,” the manufacturer was able to remove 93,977 miles of transportation annually. They eliminated 24 one-way trips of containers across the ocean while reducing cost, risk, and significant environmental impact. The overall lead time decreased from 16 weeks to 4 weeks. In today’s market where the cost to move a shipping container is up over 400%, the logistical savings alone is well over half a million dollars annually.