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Should I Use a Contract Packager Or Package In-House?

According to IBISWorld’s Packaging and Labeling Services Market Research Report, the collective revenue the packaging industry generates grew to $8 billion in 2016. This represents an average annual growth of 4.4% from 2011 to 2016, indicating that many more businesses are turning towards contract packaging as a lower cost, more effective alternative to in-house packaging.

Whether a company is a large corporation with huge budgets or a small start-up manufacturer, one of the most important questions that decision makers may find themselves asking is, “should we handle all of our packaging needs in-house or should we use a contract packager in an effort to cut costs and utilize expertise?” The answer to that question requires you and your team to keep a few key things in mind.

In-House Packaging: A Cost-Benefit Analysis

Perhaps the most important thing to understand about this particular decision is that there is no blanket “right” or “wrong” answer. Only by taking the time to define “success” in terms of your specific organization will you find the best possible fit for your long-term strategy.

Case in point: perhaps the most important factor to take into account when considering packaging and filling options is one of cost. Making the decision to keep everything in-house allows you to maintain more control, but you also have to invest heavily in infrastructure up front to get to that point. You don’t just have to buy machinery – you have to pay to have it installed, configured, maintained on a regular basis and used by someone properly trained with the right expertise. You have to consider the cost of the materials that you’ll be using for your packaging, all of which is your responsibility.

Speaking of expertise, it is also your responsibility to find the right people for the right roles across all stages of packaging for the best results. You need to find the best people for formulation, filling, design and other roles, all of which will feed directly into the end result you hoped to achieve in the first place. Remember that keeping your packaging in-house is not a magic bullet in and of itself – it is simply a tool, much like any other, that must be used in the right way to achieve what you were after at the start.

Contract Packagers: The Benefits

Making the decision to go with a contract packager also has its fair share of advantages that shouldn’t be ignored. While it is possible that you will be giving up a certain degree of control because you’re bringing another entity into the proceedings, you save a huge amount of money on upfront investments like the cost of machinery. Material costs are also diminished, as a packager often has access to the types of bulk discounts that you wouldn’t be able to get on your own.

What some people see as a lack of control others may see as an asset, as you’re bringing a trusted partner into your enterprise and are leveraging their experience to your advantage. You don’t have to find the best design team to execute your vision – instead, you work directly with your packager and their own in-house team to bring that vision into reality in the best possible way.

As a leading contract packaging company in the United States, SLC Custom Packaging is proud of the strong relationships we’ve forged over the last several decades with customers all over the country. Specializing in custom packaging and labeling as well as things like the contract filling of various liquid products into tubes, bottles, pouches and more, SLC Custom Packaging can be your complete, turnkey provider of all the packaging services you need when you need them the most. Please feel free to contact us today for more information.