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Dimensions Of Turnkey Service: The'General Contractor'

Assemblies Unlimited positions itself as the ‘point’ for entrepreneurial marketers, using a national network of suppliers to deliver services from design to logistics.

Many of Assemblies Unlimited's packaging projects require hand assembly because of custom packaging requirements that are cost-p
Many of Assemblies Unlimited's packaging projects require hand assembly because of custom packaging requirements that are cost-p

To understand where Assemblies Unlimited Inc. (AUI) fits in the spectrum of outsourcing services, consider the analogy of a general contractor that selects the right subcontractors to build a custom house. Although AUI doesn’t actually fill and package products itself, it relies on a variety of partners for contract packaging services, labeling, designing, printing, and thermoforming to deliver custom packaging to consumer packaged goods companies.

Then AUI assures that production, warehousing, and distribution timelines and needs are met. From its headquarters in Bloomingdale, IL, AUI makes all this possible through a national network of vendor partners—including more than 40 raw materials suppliers and 40 hand-assembly and packaging plants in the United States and Mexico.

“The vendor base is the anchor,” says Randy Shaw, company president. “We select partners based on flexibility, performance, quick turnaround, and doing what we ask them to do. The partners who perform for us end up with more business from us, and both parties win.

“When you work with suppliers over time, you begin to build a culture. Our San Diego office has a customer in Florida that wants product to run in California, where it will be distributed. This is how an established national vendor base can save customers a lot of money.”

AUI’s network includes two sales offices, in addition to its suppliers and packaging plants. The company’s stable of vendors that supports sales and marketing operations works as a closed-loop supply chain. These vendors include contract packagers, labelers, and suppliers of blister packs, folding and corrugated cartons, displays, and clamshells.

In 2005, services for consumer packaged goods companies accounted for 75% of AUI’s total revenue. These services include blister packaging, shrink-wrapping, skin packaging, overwrapping, polybagging, clamshell RF sealing, and gift sets. AUI also provides primary food fill, chemical packaging, and nutraceutical packaging services.

To round out the logistics portion of the supply chain, AUI represents several third-party logistics (3PL) companies, including Champion Logistics Group, Northlake, IL, and California Distribution Inc., Santa Fe Springs, CA. These 3PLs fall under AUI’s fulfillment services category.

“We market and promote the broad capability of our national network as each new opportunity for a custom package is brought to us,” Shaw says. “We take into account turnaround requirements, location, and capabilities, so we will always put the same square peg in a square hole. This is something that a customer is just not able to do themselves.”

For example, Shaw says, many contract packagers are all about pack-and-ship operations using inexpensive labor. They don’t know how to market their services, and few employ in-house direct-sales reps. So AUI acts as the marketing and sales staff for many contract packagers, promoting the strengths of each individual company as a dedicated or direct representative would.

“Contract packagers want to supply the labor, have raw goods supplied to them, and then build it and pack it out,” Shaw explains. “Many of them don’t want to be in on design and procurement. For AUI, contract packagers are the labor component of our closed-loop supply chain, which often starts with design and ends with drop shipping the final product to the end customer.”

Targeting the inventors

AUI manages this tight-knight system for more than 300 customers marketing products from food to housewares to medical supplies and chemicals. However, few of them are Fortune 500 product companies. AUI’s target customers are known in marketing circles as “virtual marketers.” These are small, nimble companies that create niche products and market them—and outsource the entire packaging function.

“A lot of our customers are great inventors. All of our customers supply us with the artwork, and we package what they invent to maximize its marketing impact at the retail level. We are looking for the person who has patented something, has a design in mind, and maybe has some commitment from retailers. But they need someone to take them to the next level and complete the supply chain for them,” Shaw says.

Phelps Industries, Wakefield, MA, is such a marketer. The company distributes its Plink Garbage Disposal Cleaner & Deodorizer in Wal-Mart; Bed, Bath & Beyond; and Linens & Things stores. Phelps had developed a lemon-scented deodorizing ball, as well as the design for a blister card package, but needed a “point” company to manage the entire production process out of the Midwest.

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