Outsourcing packaging: let experts do itAccording to the special survey report, many manufacturers became more and more interested in contract packaging enterprises in 2001, and this trend will continue to grow this year
although many enterprises in the packaging field maintain the operation of the company by slowing down investment, contract packagers (CPS) are busy signing a new round of contracts with manufacturers. While many companies try to reduce costs, the alliance between manufacturers and contract packaging enterprises has not been affected
this is the conclusion of a research project conducted by packaging world magazine last year. Packaging world magazine measured the current situation of contract packaging by investigating end users, contract packaging enterprises and their suppliers
among the 120 end users who participated in the survey, more than 90% believed that their company would cooperate with contract packaging enterprises in the same amount or more business in 2001 compared with 2000 (see Table 1 below). In fact, only 9% of enterprises said that they reduced the outsourcing business volume in 2001. This optimistic result is very noteworthy, because the investigation report was carried out after the 9/11 terrorist incident
the business volume of contract packaging enterprises
the companies with less business volume than the previous year and the companies with the same business volume as the previous year are more than the companies of the previous year
9.2% 50.8% 40% in 2001
13.3% 42.5% 44.2% in 2002
although the overall economic development is in recession, the business of packaging enterprises with one word and one line has gone against the trend. Perhaps the companies participating in the survey report only represent those companies that are less affected by the economic recession; A little more than half of the enterprises (53.3%) announced that their sales in 2001 had increased compared with that in 2000
the situation this year is still very optimistic. 86% of end-user participants claimed that the business volume between their company and contract packaging enterprises would maintain the original level or increase in 2002. Only 13.3% estimated that their business volume with contract packaging enterprises would decline
there are also some interesting differences according to the size of the company. Less than 12% of the large companies surveyed believe that the business volume with contract packaging enterprises will decline, while 22% of the small companies surveyed believe that their business volume with contract packaging enterprises will decline this year
bellports, a bicycle manufacturer based in Santa Cruz, Canada, currently has stable sales. But Mr. Gareth Walters of the company said that the overall sales of bicycles fell by 12%. As a result, the company merged two departments and laid off 35% of the staff. According to him, although the total production of the company's packaging products will decline, the varieties of packaging produced will increase
walters introduced to packaging world magazine that "until three months ago, I had designed nearly three boxes of works in my life." With the development of the company, these have been transformed into "designing the best packaging within the enterprise, especially for our affiliated enterprises." However, repetitive work such as loading and unloading, transportation and packaging will still be outsourced
the company also operates a factory in Rantoul that mainly produces customized packaging products. Mr Walters also said that for a new order to buy bicycle helmets, most of these helmets were produced in Asia. Then it is transported to Rantoul for final assembly, packaging and transportation
"most retailers will use brand names. They want to sell with brands, but they need their own packaging." Mr. Walters explained, "so we plan to further strengthen our brand and break away from the original types of daily necessities and sell a lot." Packaging will play an important role in this transformation
although there are many reasons for companies to purchase packaging externally, one of the most prominent reasons is to expand their production lines. Among the end users surveyed, 6 out of 10 said that their company had launched new products through contract packaging enterprises
however, this also varies with the size of the company. About 71% of the respondents from large companies believe that their companies have launched outsourced new products, while 55% of the respondents from small companies said that their companies have not launched outsourced new products
a person who carries out packaging research and development for industrial product manufacturers said that the adoption of contract packaging companies allows them to add some new products that cannot be produced by the internal production line of the enterprise. The marketing manager of a Midwest brewery said the same. "By cooperating with contract packaging companies, we can provide a variety of products and packaging, although we are limited by existing bottling equipment and venues."
the packaging customer of a major consumer product manufacturer said that his company mainly provides the packaging of promotional products and products with small capacity through contract packaging enterprises. "They provide us with an effective way to offer promotional products to the market, allowing us to respond quickly to opportunities in the market." He also said, "in addition, we also provide some constantly changing small capacity products through contract packaging companies."
the quality control manager of a large-scale brewery said that his company used contract packaging enterprises to flexibly launch new packaging. "They allow us to respond more quickly to market opportunities in packaging without affecting the large-scale production within the enterprise." In fact, 75% of the respondents admitted that contract packaging enterprises can help companies bring products to the market more quickly
surprisingly, the decision made by a manufacturing company to purchase external packaging is not entirely within the scope of the responsibility of the management or production manager (see Table 2 below). In fact, the decision to outsource packaging to other companies involves almost every department of the company
Table II The Department that decides to carry out contract packaging (multiple options)
department marketing department production department procurement department management department engineering department
proportion 49.2% 54.2% 52.5% 51.7% 45%
in the survey report, 35.9% of the respondents believed that the lack of technology and production capacity within the company was the main reason for their company's external procurement and packaging. (see Table 3 below)
he said: "We can take many measures from the technical level
Table 3. Reasons for using contract packaging companies
reasons: there is no process and productivity within the enterprise, there is no technology within the enterprise, seeking a better geographical location, reducing early investment, and other
the corresponding ratios are 35.9%, 12%, 6.8%, making it have higher requirements for equipment in the processing process. Nearly 1/3, 12%
but nearly one third of the respondents believe that In order to minimize the early investment, and 12% of the outsourcing business is due to the lack of appropriate worker skills within the company
Tom Tompkins, parts packaging manager of American Honda Motors in Marysville, Ohio, said that technical problems are the main problems facing the company at present. "The main reason why we use the contract packaging company is the technical problem. We are not a packaging company, so the contract packaging company provides us with technology without our internal ownership."Bill Hendricks, the purchasing manager of Welch foods, believes that technology is absolutely the most important. "Many of our businesses with contract packaging enterprises use the capabilities owned by these companies that we do not have. It is often because they have equipment that we do not have." Mr. Hendricks added, "sometimes we decide whether this technology should be introduced by outsourcing, so sometimes these arrangements are actually some kind of test of the market."
a Mexican subsidiary of a large American food manufacturer has similar reasons. The marketing manager of the company believes that the company "can enter the new market now, although the company currently does not have the technology required by the new market."
the general managers of the two major companies saw the joint factor of external procurement and packaging. "Contract packaging enterprises provide flexibility and speed of market entry, and reduce our investment in launching new products." Said the packaging R & D staff of a large household chemical products manufacturing company. The packaging general manager of a state-owned private car manufacturer also said almost the same thing
there is a point here that the source of pressure mainly comes from the flow of hydraulic oil. It is often strange: many large companies (39.2%) claim that using contract packaging companies is mainly to reduce early investment, while few small companies (33%) use this factor
not all personnel involved in the investigation report are positive about the use of contract packaging. The packaging manager of a large southwest poultry company believes that "contract packaging enterprises are unnecessary in some cases." The procurement department staff of a southeast dispensing company believed that enterprises using contract packaging were "more expensive", adding that their enterprises had always rejected this
economic problems also affect the purchasing consciousness of buyers of a Midwestern beverage factory. He admitted that contract packaging enterprises "have better flexibility, allowing factories to respond more quickly and catch up with the development of the times." However, he still believes that "the cost is often much higher than what we do inside the enterprise."
Hendricks of Welch disagrees with this view. "We believe that contract packaging enterprises tend to pay more attention to costs. The common motivation for outsourcing companies is to ensure the total packaging volume of the company."
the purchasing manager of a nutritional product manufacturer in the central and western regions is very contradictory. The adoption of contract packaging enterprises "reduces the overall cost, so that we do not have to hire additional labor or buy more equipment." But he also complained that contract packaging enterprises rarely deliver on time, "and there are usually inventory problems between us and them."
the packaging manager of an industrial product manufacturer also encountered the same problem. He said, "because there are no packaging personnel in our company, the adoption of contract packaging enterprises reduces our ability to respond to changes in market demand. The response time of contracts is too slow to respond in time to market opportunities."
except for those companies that have problems with contract packaging enterprises, most respondents regard contract packaging enterprises as an expansion of their companies
more than half of the respondents claimed that their enterprises have established a partnership with contract packaging enterprises, and others plan to establish such a relationship in the future. (see Table 4 below) Tompkins of American Honda said that their company has established multi-level cooperation with contract packaging enterprises. "We work very closely with their engineering designers. In the stage of developing the best packaging products, our engineers work closely with their engineers. We have many difficult parts in packaging, and we have high expectations. This is the reason why the cooperation relationship is very close."
partnership with contract packaging enterprises
category the proportion of those who have established partnership plans to establish partnership without plans to establish partnership is 52.1% 14.3% 33.6%
his company has realized that the goal is
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