Why The Cost Dropped When The Order Quantity Increased?

This is a FAQ from many new sourcing who worked in flexible packing industry. Probably you will totally understand after you read this article.
Producing packing-pouch is not so easy like packing something with packing-pouch.
Before starting the mass production, there are a lot of procedures, such as debugging equipment, test the printing plate, reload the ink tank etc.

WHY THE COST DROPPED WHEN THE ORDER QUANTITY INCREASED?

Here is a calculation for different order quantity

• Capacity :30000pcs/day, 8hours
• Preparation:1hours
• Order quantity:10000pcs A / 10000pcs B /10000pcs C
• Producing time: around 2hours

What is next?
Spent another 1 hour for preparation , then produce B. regarding order C, it has to be finished tomorrow since time is not enough.

If the order quantity is 30000pcs A, full capacity for the producing- line . This order can be finished in 1day.
In one word, low volume order takes too much times on the preparation, that is a waste of raw material and time. That is why most of the suppliers set a MOQ up for customer.

Mass production, this is the one of reason why the cost dropped.

Here is one more topic after the labor cost.
What is it? —— ATTRITION RATE

Here is a general procedure of producing pack pouch:

1. Plate making–for the printing on the pouch
2. Debugging printing machine
3. Color matching
4. Composite laminate films
5. Dry in the oven
6. Seal&Cut
7. Bag-Making

☑Plate making
☑Debugging printing machine
☑Color matching

— During these steps , some material were consumed for test .
It is called “test loss”

 

☑Composite laminate films
☑Dry
☑Seal&Cut
☑Bag-Making

— During these steps, some defect products were sorted and destroyed.

All above loss are calculated into the attrition rate.

So, that is reason why the cost dropped when the order quantity increased.
The simplest way to make the cost down is increasing the order quantity.

But, How to balance the cost and the order quantity ?

1）Increase the Q`ty if possible
2）Get the stepwise quotation from the supplier