Where you purchase your packaging makes a big difference to your business. After all, it affects not only your products and packaging materials but also your warehouse operations, inventory management, cash flow, and other processes. So it helps to view your sourcing options through a wide lens.
Below, I look at the pros and cons of buying packaging from a distributor and buying direct from the manufacturer.
Advantages of Working with a Distributor
The main advantages of working with a distributor for your packaging solutions include:
Local contacts. When you work with a distributor, you work with people in your market. And that means better customer service, clearer communication, and the chance to build stronger partnerships. Thanks to regular in-person contact, a local distributor gets to know your business well including the ebbs and flows of your ordering cycle.
Just-in-time ordering. Distributors offer local warehousing solutions that manufacturers can’t match. Here’s how: a distributor orders your products, stores it until you need it, and then charges you only for what is shipped to your warehouse. Plus, if the distributor is local, this gives you just-in-time ordering capability, which helps reduce your inventory costs since you only pay for the quantity you need for the short term.
In contrast, when you buy direct, you typically don’t get a warehousing solution. Instead, you must accept your entire shipment at once, which often includes a high minimum order, leaving you to deal with storing your products and managing that inventory. You’ll also need to pay up front when you buy direct, which may tie up capital that could be better used elsewhere.
Better inventory management. The distributor shoulders the burden of warehousing enough inventory on hand to fill your orders. That means it manages its ordering cycle to maintain the best levels in its warehouse for your products — so you don’t have to.
Shorter lead time for orders. When your products are stocked locally, you can get next-day delivery when you need it. This spares you from having to order 6-8 weeks in advance and hoping it matches your future needs when it finally arrives. Short lead times also give you greater flexibility and help you place more accurate orders.
Fewer dollars tied up in inventory. Since you only pay for what you need when you need it, you have less money sitting on your shelves in the form of inventory. This frees up resources for other uses.
Wider variety of packaging options. When you buy direct, you’re limited to that manufacturer’s products only. With a distributor, you have a much wider range of products to choose from since distributors source from many manufacturers. This lets you choose the best packaging for your needs. It also lets the distributor help you solve more packaging challenges because it has so many more options to present.
The Pros of Buying Direct
The advantages of buying packing direct from the manufacturer include:
Lower cost per unit. Buying direct typically costs less per unit than using a distributor. If your volume is consistently high, this may make a difference. Although depending on the packaging or application, you may find costs between the two sources is competitive enough for you to take advantage of the other benefits of using a distributor.
Deal directly with the manufacturer. Some companies may prefer to work directly with manufacturers to eliminate the need for a third party. That said, a reputable packaging company will have the same level of technical expertise as the manufacturers’ own staff since they have been trained directly by manufacturers.
Making the Right Choice for Your Business
In the end, choosing between working with a distributor and buying direct involves many factors, with cost being just one. When deciding, be sure to add up all the value you get from working with a distributor to see if those benefits outweigh any potential cost per unit savings you may find. To discuss your packaging needs, including which sourcing choice is best for you, email Summit or call 253-858-4040 to chat with one of our experts.
