Optimize parent-plant efficiencies. Contract packaging allows for the management and control of short-run jobs created by new or niche products, or seasonal demand outside of primary manufacturing economies. It also creates “end-of-line” flexibility because it's possible to utilize a range of capabilities of multiple vendors. This allows for almost unlimited package and volume options to meet the changing and unpredictable nature of consumers.
Mitigate financial risk. In many cases, little or no capital investment is needed. This is particularly attractive for new product launches when future demand is uncertain and for non-standard product promotions. In addition, manufacturers are typically attracted to lower staffing and operating costs when utilizing contract packaging. A make v. buy analysis will usually reveal that maintaining and managing the flexible workforce productively is cost prohibitive.
Contract packaging companies fall into four main categories: cost leadership, bundled services, thought leadership, and robust systems.