Fresh and more in-depth research being conducted for the Contract Packaging Association identifies this market place reality as a clear part of business today.
“It’s not just location. Think in terms of, ‘Where along the value chain can I find additional value?’” Kevin Armour, vice president at Strategic Analysis Inc., said at our recent CP 08: Succeeding with Contract Packaging conference. SAI has been conducting research on industry size and trends for the association over the past two years.
One obvious way for consumer packaged goods companies to pare costs when using contract-packaging services is to put each production step under a microscope. But often, brand owners get so excited about the prospect of a new product, particularly when it involves a promotion, that they work with inflated estimates of product demand.
Too often, this practice results in costly production overruns, and the brand owner then faces the decision of what to do with returned products whose window of opportunity for sales, in its current packaging configuration, has passed.
Our Centerpiece article in this issue of Contract Packaging dissects an emerging end-of-line, factory-floor model called Last Moment of Differentiation, which might help you solve this challenge. One of its main benefits, if you’re responsible for keeping packaging costs in check, is the savings associated with curtailing obsolete product. At least two contract packagers are developing models that would make labeling the very last production step.
This solution might be the right answer for your brand if you seek out savings opportunities beyond the obvious on your co-packer’s lines. If you’re not looking at end-of-line alternatives now, it’s a place to consider investing some thought.
