Deciding to take on the services of a contract packaging company to finish your company's products can really speed up your ability to deliver. You know your company better than anyone, so when you are looking through the last year's sales, you will likely notice times when you see a boom in sales and others when things calm down a bit. So when should you decide on contracting a co packing service, if at all? In this article we will go over a few points to consider while making your decision.
#1 Does It Make Sense to Do In-house?
If your company is on a steady upward growth pattern that you can predict for into the future, you may be thinking about upgrading your in-house capabilities to match that growth. However, something you want to consider is the outset cost for equipment as well as the upkeep associated with regular use. Another factor is the inherent spend on hours for training staff to use the equipment both effectively and safely, in a way that doesn't cause unnecessary wear and tear on your machines. When you outsource the finishing of your product to a professional company that specialises in co-packaging services, all of those potential costs disappear. It may seem like an unnecessary expenditure, especially if you are a small operation on the rise, but relying on a highly skilled company to get your product finished and ready for the shelves can save a lot of time and money in the end.
#2 Do You Tend To See Times of Boom and Bust
When you go through and look over the last few years of business quarter by quarter, do you see a trend where certain months see a large spike in sales and others a sharp drop? This is common for product based businesses in the retail sector, especially around holidays associated with gifting. If that is the case, it probably makes sense for you to outsource the finishing of your product to a contract packaging company on a short term basis to hit those booms and avoid losing money on the bust. Many packaging companies are happy to set up specific windows of service in a contract as well, so you should be able to hone the contract in your favour to avoid any unnecessary expense.
#3 Do You Have The Physical Space to Expand
Limitations in space can be a reality, especially in cities such as Sydney or Melbourne where rent can be a major chunk of your annual budget. So when you look around your building, is there enough space to add or expand your in-house packaging operation to meet demand? Would it require you to break your lease to move buildings or even to take on a second lease in a separate building in order to do it right? If the answer is yes, then you should heavily consider bringing on a co-packing service in the interim and test the waters when it comes to expanding your brand. Imagine if you take on a second lease, or move into a new building and unforeseen circumstances cause a drop in sales - then you are stuck losing money for the long term. If that were to happen in the other scenario, you would just end or amend the contract and scale back to meet your budget.
Being in the product business is tricky enough as it is, so why not reduce the risk and get ready to expand safely by outsourcing your product finishing to a professional. Having the control to scale your output to meet ever changing demand puts the power back in your pocketbook.