What is the actual value of using a contract packager? First, we need to total the dollar value of the resources that were distracted from Company A. These line items don’t always appear on a general ledger. It soon becomes obvious this number will vary wildly, depending on who does the calculations.
Regardless of the method used, the number will be huge. Do your own math based on your company’s experiences. Account the value of the involved resources discussed in Company A’s approach and calculate their worth based on a significant percentage of their worth being distracted and dedicated to a non-core event.
Next, we know there is a direct cost to both Company A and Company B. For Company A, the direct cost includes additional labor, materials, equipment, space, utilities, and overtime for core staff. For Company B, the cost is merely the charge for the contract packager. Our example assumes that both work-in-progress and component costs are the same for both companies.
