03 Jan Packaging manufacturer, supplier or merchant? Which is right for you?
How to decide between working with a supplier, or directly with a packaging manufacturer
If you are considering switching packaging suppliers there is a lot to consider.
For starters, why are you switching?
Defining the problems or issues with your existing supply should help you when looking for specific qualities in a packaging company. It may be to reduce transit damage, lower overall costs, improve efficiency, boost your sales etc. etc. The list of reasons could be quite long.
However, you also need to consider whether to consolidate your packaging suppliers (if you are using multiple companies currently). You may need to think about a formal tender process, and how to handle this.
Basically, there are a lot of factors that can influence your decision.
However, one factor is frequently overlooked – do you work with a packaging supplier, or directly with a packaging manufacturer?
Supplier or Manufacturer?
So what are the differences between packaging manufacturers and suppliers?
In business terms, a supplier is a party or organisation that supplies goods or services. Their basic function is to supply the goods and services that have been manufactured or provided by another party. They do not produce or manufacture products themselves but will resell products manufacturered by their partners.
They are responsible for the supply chain management that provides a link between the manufacturer and end user or business. Packaging suppliers are often also referred to as merchants or resellers.
The goods produced may be sold directly to end users, or through a network of distributors, retailers or suppliers.
Whilst a simple comparison, the difference that you can see in terms of service and product range from choosing to work with one or the other can be significant.
There are pros and cons of each approach, which this article details below in relation to your packaging supply.
Advantages of working with a packaging manufacturer
Increased control over quality
Working directly with a manufacturer allows them – and you – a much greater control over quality.
It allows you to carefully select specific materials and designs that are ideally matched to your application, product or supply chain requirements.
For example, it is possible to select a specific board grade that has been shown to offer the best strength / weight ratio for the weight of your shipment, and which can be further enhanced through an additional surface coating (e.g. the provide protection from moisture).
A supplier almost certainly would not have this specification available from stock, so would need to source this or work alongside a manufacturing partner (which could impact costs and lead times).
Value through design
A packaging manufacturer will usually (but not always) have a strong design focus too.
This can allow for further refinement of your packaging supply. It can enable you to not only source optimum materials, but also the structural packaging designs to match.
For example, a designer could create a bespoke carton that includes integrated fittings that eliminates your need for (and cost of) void fill packaging.
Again, a supplier – unless offering a custom design service – would struggle to do this and be limited to standard products and secondary packaging.
Value added services
A manufacturer can also offer a number of added value services too.
By controlling the manufacturing schedules, you can entrust your supplier to hold appropriate amounts of stock and adjusting production cycles to ensure that you do not suffer shortages during peak times.
The control over the design and materials also means that any issues you are facing with transit damage can be more easily resolved as well. When combined with testing of your packaging, this can realise huge cost savings through minimising the costs of product returns.
Besides this, there is the increased choice of materials, custom design, value engineering, and being able to take a holistic view of your entire packaging processes.
Bespoke tailored products
Whilst the point referencing value for design gives a fairly advanced example, taking advantage of bespoke products can be as simple as utilising a bespoke size or print design.
The benefits of this are well documented.
Custom sizes use less material, so are generally more cost-effective and better for the environment. They are cheaper to ship due to their volumetric size / weight, they minimise void to fill and can also reduce other secondary packaging too.
This is in addition to print options that allow you to add branding to increase awareness, or even aid standout if selling your products in retail environments.
Finally, you may find that the manufacturing expertise allows for the creation of products that you did not even realise could be manufactured in a specific way. A good example of this is creating spools from corrugated cardboard – instead of the traditional (but much heavier and costly) wooden equivalents.
Reasons you would choose to buy from a supplier
Supplier Lead Times
Suppliers, rather than manufacturers of packaging, are likely to keep a range of standard items in stock.
This means that, if you do not need a bespoke design (and can live without all of the additional benefits this provides) you can receive the packaging on a very short lead time.
This can be useful if you experience severe peaks and troughs in demand, you are experiencing issues with forecasting, or you struggle for warehouse space.
It must be noted however that a better, long-term strategic plan can alleviate these problems through JIT supply, usage monitoring and flexible production cycles.
In a similar vein to lead times, as standard boxes, cartons and sundries are held in stock, the unit costs can be very competitive. This is because a supplier will buy and turn over large volumes of these stock lines, allowing them to take advantage of economies of scale and giving them considerable buying power.
Some of this cost saving is then passed on to your business.
However, as detailed previously, unit costs should not be your only consideration when sourcing packaging.
If you are forced to select a box which is larger than required (but is still the smallest suitable option available), the additional postage and void fill costs can make the overall packaging more expensive.
An area where suppliers are definitely your best option is if you are only looking for low volumes of packaging.
This is due eliminating the need for any design, setup or tooling costs that a manufacturer of custom products would usually need to pass on.
As a supplier is selling a stock range of products, this is an issue that they will not face.
Therefore, if you are a start-up, or your business model is based on very low volume orders, then working with a packaging supplier would be your best bet.
However, there is a tipping point whereby the volumes you are ordering and using opens the door to potential cost savings (and other benefits) provided by custom options.
There is no right or wrong answer when it comes to selecting the type of packaging company that is best suited to supply your business.
It is also important to consider what you need to achieve with your packaging, what your budget is, the challenges and problems you face and even the “fit” with your own business culture.
Regardless of the route, you go down, ensure that the quality reflects your business and product, and exceeds your customer’s expectations.
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