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What is this thing called Resource Distraction Value?

It’s the real-dollar value–sometimes as large as the direct costs themselves–that a company saves when leveraging a contract packager. The benefits, although seldom tracked, fall directly to the bottom line.

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Imagine a resource, any resource. It could be money, water, time, or fuel. Time is recognized as the most valuable resource of all.

Regardless of what it happens to be, the resource has maximum and inherent value when engaged toward a primary purpose–let’s say its “core competency.” But when used for a non-core purpose, the resource loses its value and thereby significantly diminishes the return on investment (ROI) to its shareholders.

In today’s lean manufacturing environment, that distraction could make the difference between both market share gain or loss and a financial profit or loss.

At Wilpak, we have trademarked a phrase that describes this situation. We call it Resource Distraction Value™ (RDV), and it has powerful relevance for contract packagers. Let’s look at an example to demonstrate how and why.

Visualize a consumer product goods company that has built an efficient supply chain to include highly engineered plants and a distribution network that provides blinding speed to market.

We’ll call it Company A. This company’s resources have been aligned toward a common goal: to manufacture the highest-quality products, in an efficient and state-of-the-art environment, delivered to customers on time, with the lowest possible total delivered cost. When this occurs, Company A maximizes shareholder value and solidifies market share.

An inventory audit breaks down Company A this way:

• Duties. Managers and personnel are involved in production, engineering, material handling, planning, control, quality assurance, maintenance, purchasing, safety and training, transportation, human resources, information technology, accounting, security, sanitation, distribution, materials, and inventory.

• Facilities. These include the actual buildings, floor space, and the cost of transportation, handling, and storage of the product that is displaced from this valuable space.

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