Purchase and supplier agreements with Fapco for small parts packaging are true partnerships with risk assumed by both parties. These include agreements for minimum buy quantities, order quantities, the numbers of kits per year and the quantities of materials to produce the kits. Labor and material costs are also a factor. Questions like, “How many times a year is Fapco going to that bin to pick and package? Does one component go into 15 other components and is there enough to handle both components? If one kit gets hotter than the others, how will the allocation change?” These are all questions that Fapco and its partner customers are used to working out to make each program efficient and profitable.
“Today we are seeing a trend in companies that would rather pay an outside supplier, even if its more expensive in the short run, so they don’t have the administrative overhead built into their costs. Labor, inventory management, overhead and transportation costs are all included when they do the numbers. They want to just call Fapco and say ‘we need 250 kits and we all do what we do best,” he said.
Sloniker concluded that this trend continues to build. “For the past five years Fapco has done business with many companies. Those that are terrified of packaging components correctly and consistently in-house, and companies that are not afraid of packaging in-house but can’t handle the financial burden of inventory, labor and equipment that it takes to package products correctly on what they consider to be a large scale. We have the contract packaging solutions for both.”