Consider all manufacturing alternatives before making your selection.
As your company evolves, you may notice the need to expand your manufacturing capabilities. When your business needs to increase its production throughput, you can choose between two capital equipment options: (a) purchasing your own packaging equipment, or (b) outsourcing your manufacturing to what is known as a Contract Packager, aka Co-Packer. It can be difficult to tell whether in-house packaging or co-packing is your best option, so consider the following 3 important points when deciding among packaging alternatives.
1. One-time vs Ongoing Fees
In a nutshell, your business can make the initial investment in equipment to perform in-house manufacturing or completely outsource your manufacturing needs. It’s really as straightforward as that, but let’s fill in some of the gaps and review pros/cons of each model.
An initial investment in equipment can range in cost depending on your production needs. Whether you need (a) a simple, semi-automatic handheld solution, (b) a turnkey system, or (c) a fully automated machine, the initial cost of investment is something each business will need to evaluate per their short-term and long-term objectives.
One of the primary manufacturing alternatives is outsourcing. With outsourcing, your initial cost of investment can be much lower which can be appealing to businesses. However, outsourcing your manufacturing can have its own financial hurdles with ongoing, monthly and mounting costs – possibly complicated further with minimum quantity fee structures. In some instances and depending on your manufacturing volume, 3 – 4 months of ongoing fees can almost be equivalent to the initial investment of owning your own machinery.
Owning your equipment certainly does come with an initial cost of investment, but that expense can generally be categorized as a one-time expenditure. Each are viable manufacturing alternatives, but each business will need to strategically evaluate their options, business goals, and consider what is best for their interests moving forward.
2. Experience and Facility Space
Another area of review in determining the best manufacturing alternatives is your facility space and level of equipment experience.
In some instances, certain types of manufacturing machinery can be as easy as operating a microwave with a small learning curve. In other scenarios and depending on the complexity of your system, some level of training and in-house operator experience is helpful. However, most equipment purchases come full-ready with specific training programs, how-to-videos, and technical support regarding initial setup/installation.
Again, the alternative is outsourcing your needs… outsourcing will require no training or mechanical experience at all for your manufacturing to be performed. The Co-Packer assumes all equipment expertise. In the past, most businesses new to manufacturing were happy to go this route as they were reluctant to take on these responsibilities not having in-house expertise. But more and more nowadays, these forward-thinking businesses have added resources to their employee base that encompass the necessary manufacturing experience to better control their position in the marketplace – helping to strengthen the company’s overall manufacturing experience.
The other tangible review is your current or future facility/floorspace. That is, what type of space do you have now or plan to have in the future for your manufacturing needs. Depending on how much space you have now or in the future may automatically dictate which path makes the most sense for you and your business.
3. Control of Your Business
Having control of your business seems like an afterthought, as no one plans to lose control of their business. So, how your business operates, keeps inventory, performs quality checks, decides its production schedules, and makes moves within the marketplace can be some of the most important things to you as a business owner. But depending on which manufacturing alternatives you choose, you may maintain complete control or surrender some level of control in how your business operates on a daily basis. A few areas of control that may ebb/flow regarding the path taken are the following:
Inventory. If you decide to maintain in-house manufacturing, then that responsibility of production falls directly on you and your team. You will have the ability to control your inventory in real-time scenarios and make quick judgments on what you want/need regarding inventory levels. Should you and your team have the bandwidth to exercise these needs, great; if not, it could snowball into a plethora of issues. If you choose to outsource your manufacturing, you will be at the service of your co-packing vendor in terms of scheduling your needs. To be a successful business not unlike yourself, co-packers will have many other customers, some well-prepared, planning ahead of time, some last-minute with rushed orders incurring high turnaround fees, not to mention the wide range of products that they deal with as a co-packer. Your co-packer will be happy to accept any/all of these business requests, but it cannot help but impact their production schedule as well… will this impact your production schedule, hard to say. These are things outside of your control that you will have to still field and factor into your planning no matter how organized and well-planned the schedule.
Quality. Similar to inventory, if going the outsourcing route, you may have to account for certain levels of quality issues regarding re-manufacturing/re-packing and the back and forth time involved in resolving these scenarios. Of course, your co-packer vendor will work with you and assuredly assist you in post-receipt of packaged products with quality issues, but you may have to send those items back in full to re-execute the entire manufacturing and packing of goods. Let alone if you have time in even doing so… In-house manufacturing does have a stronger level of control regarding quality issues. Certainly, this doesn’t mean that quality issues will be void of your in-house packaging process, but identification, containment, and re-manufacturing/re-packing of goods, which will still need to occur, can be a speedier process due to your level of control.
Production schedules. Again, it’s a level of control that you as a business owner are comfortable in relinquishing or control that’s a must-have without question. With outsourcing, you will be somewhat at the service of your co-packing vendor’s schedule. They will have a multitude of customers with different products that need to fit into an equally tight production schedule. For you to hit your production timeframes, you will need to plan extremely well on your end as well as hope all goes well on your co-packer’s side. Of course, no one is looking to throw a wrench into the works, but in business unexpected things can/do happen without any intentional actions. If in-house manufacturing is your model, you will have complete control of your production schedule. However, there is still no guarantee that you will not have any manufacturing issues that will impact your production schedule. But as master of your domain, you will have the control to execute whatever is necessary on your time schedule. That is, if you have a product that just increased in demand and you need to increase inventory in one week’s time, you control your manufacturing and can start a new production run at 3 am in the morning if needed. You simply have that level of control with in-house manufacturing.
Specialists in Liquid Filling Systems
We hope the following review has shed some light on the different considerations for your manufacturing needs. Ultimately, whether you choose in-house manufacturing or outsource with a Contract Packager, you will now be better informed and navigate your decision-making process with confidence.
For over 70 years, FILAMATIC has been providing a wide range of liquid filling systems to the packaging industry. We create flexible, customized solutions for every stage of your business growth. Whether you require a single handheld filling machine, a complete fill-cap-label solution, or a fully automated, integrated filling system, we have the liquid filling experience to ensure your satisfaction is exceeded. For more information on liquid filling, capping, and labeling solutions, please call 866.258.1914 or email info@filamatic.com.