News & Updates

In-Distribution Center vs. Shared-Facility

The opportunity to eliminate freight is a measurable and compelling reason to consider in-DC packaging operations. However, experience and history dictates that even with the elimination of freight, in-DC packaging operations do not always offer the most competitive solution.

As a packaging expert who operate multiple in-DC and shared-facility packaging operations, we continually analyze these options when collaborating with our customers.

Shared packaging operations run multiple customers at facilities that we own. Shared facilities spread the salaried and fixed overhead over multiple customers and higher volumes.  Generally speaking, the higher volume shared facilities offer more automation, more flexibility and space to optimize line layouts. Lastly, the multiple customers in our shared facilities stabilize and balance the seasonality of work, ensuring that we are utilizing our assets throughout the year. This allows for better planning, consistent labor, increased efficiency, and the ability to manage spikes in demands more easily.

In-DC operations eliminate transportation costs between DC and co-pack operations, having inventory on-site allow for immediate start of projects, and building costs can be removed from the co-pack price.

Unsure of what option is best for your company, or considering In-DC packaging operations?  Call one of our packaging experts to learn more about which option might be best for you.

Dedicated in-DC Operations

Advantages:

• Reduced Freight Cost
• Reduced building costs (no rent)
• Inventory on-hand
• Best suited for consistent yearly volume

Disadvantages:

• Not ideal for items with seasonality — without consistent labor base, difficult to ramp-up labor for peak demand
• FTE, planning, production, quality, supervisor overhead absorbed by single customer
• Limited space/flexibility to grow
• Limited space/flexibility to automate lines
• Building constraints (not enough parking for employees, inefficient shift change)
• Difficult to invest in new equipment and technologies
• Potentially higher liability for having hundreds of workers and external partner in DC
• Inflexibility, difficult to make changes and move away from embedded partners

Shared-Facility Operations

Advantages:

• Gain additional valuable square footage in the DC to support growth
• Reduced liability by removing 3^rd-party/external partner from facility
• Reduced building overhead costs (shared among higher volume and multiple customers)
• FTE, planning, production, quality, supervisor overhead shared across multiple customers and more volume
• Space to grow packaging volume and output
• Space to optimize line layouts and add automation
• Easier to invest in new equipment/technology (higher volumes to support investment and share expenses)
• Easy to transition to from in-DC packaging model

Disadvantages:

• Building costs (rent)
• Increased freight costs, but much can be offset with direct shipments from manufacturing

Back to News Articles