Compare continued contract manufacturing, a phased owned facility and a full new plant using the same product, demand and cash-cost boundary.
Discuss Your Project
Document current fees, material ownership, minimum runs, freight / storage, qualification, lead time and true service constraints. The existing alternative has costs and advantages that should be represented fairly.
Consider which accepted process steps can be internalized while specialist production or packaging remains external. Price additional transport, coordination, trials and duplicated fixed costs.
Define all ingredient, process, package, site, utility, staff, quality, maintenance and customer-service responsibilities. Owned capacity creates fixed costs and funding requirements even when orders are below plan.
Use the same accepted product, package and demand for outsourced and owned alternatives.
Translate the product / OEM requirement into a viable building, utility and operating plan.
Coordinate qualification, operator readiness, supplier tests and commercial transition before transferring customer demand.
Review each system by its operating duty and the interfaces to be agreed before procurement.
Alternative and all-in funding assessment.
Product / package and complete process design basis.
Complete plant process / cleaning services.
Selected specialist equipment and owner organization.
Swipe horizontally to compare all columns ↔
| System | Operating duty | Relevant DPS guide | Confirm before purchase |
|---|---|---|---|
| Investment alternative assessment | Alternative and all-in funding assessment. | Capital planning ↗ | Same product / demand and explicit counterfactual. |
| Process / line design basis | Product / package and complete process design basis. | Process engineering ↗ | Qualified supplier responsibilities and site feasibility. |
| Process utilities and distribution | Complete plant process / cleaning services. | Utility infrastructure planning ↗ | Source, distribution, site fit-out and future phases. |
| Specialist equipment interfaces | Selected specialist equipment and owner organization. | Installation & integration ↗ | Acceptance, training, product trials and operating readiness. |
Start with the business outcome
A brand should consider an owned factory when the commercial, product and operating model can support the entire asset and overhead base. DPS can discuss scoped feasibility, process engineering, equipment / OEM interfaces, utilities, project delivery and startup planning. The reason to engage is to compare viable alternatives before buying machinery, not to assume that removing a co-packer fee automatically creates a better return.
Confirm the exact brand-to-factory product, preservation route and project suitability with DPS before assigning a delivery scope. Confirm the product / package, specialist process, quality / release, site / licensing and owner operating responsibilities before project commitment. This guide is an assessment framework, not evidence that DPS approves the brand’s formula, guarantees customer demand or supplies every specialist machine.
Document current contract fees, material ownership, service constraints and actual demand alongside the equivalent owned-factory process and package boundary.
Confirm site, utilities, specialist equipment, staffing, quality, maintenance and supplier acceptance responsibilities for the selected ownership or phased model.
Reconcile demand downside, ramp-up, working capital and retained external supply before committing to the operating plan.
Review the scope, cost assumptions and operating case for your project. The examples and calculators below support early planning and are not DPS quotations.
Price the actual outsourced service and feasible staged internalization at the same accepted product and volume. Include logistics, duplicated work, qualification and quality responsibilities.
Define the whole operating organization, qualified product / package route, equipment, site, utilities, staff, service and realistic demand.
Swipe horizontally to compare all columns ↔
| Observed condition | Measure before design | DPS / team decision | Economic basis |
|---|---|---|---|
| High external conversion fee | Matched fee / ownership / service cost and actual volume. | Compare owned variable and fixed costs on the same scope. | Incremental insourcing difference, not total brand revenue. |
| Underused owned capacity | Demand downside, shifts and fixed operating burden. | Compare staged capacity and outsourcing continuity. | Cash need, ramp and utilization exposure. |
| Incomplete capital estimate | Process / OEM, site, utilities, trials and inventory list. | Build an all-in owner budget. | Full initial funding rather than machine amount. |
| Launch / operating readiness | Staff, quality, maintenance and supplier acceptance gates. | Coordinate phased startup and retained supply. | Actual transition cash and accepted commercial output. |
Swipe horizontally to compare all columns ↔
| Decision | Contract Production | Owned Facility |
|---|---|---|
| Production Responsibility | Define supplier qualification, service terms and retained brand responsibilities. | Include process, package, site, staffing, quality and maintenance duties. |
| Volume and Flexibility | Compare minimum runs, lead time and actual customer demand. | Plan utilization downside and fixed costs, including phased alternatives. |
| Launch Funding | Include fees, freight, storage and the agreed material-ownership model. | Include installed scope, ramp-up and working capital on the same cost boundary. |
This separate hypothetical comparison holds brand sales and materials constant; they cancel from the insourcing decision. The standalone factory calculator uses full product contribution and therefore answers a different question. Do not add the two results. Example: 1,400,000 good kg/year, external conversion fee $1.20/kg, internal incremental conversion cost $0.55/kg and owned fixed cost $900,000/year.
Swipe horizontally to compare all columns ↔
| Matched cost boundary | Continue co-packing | Owned operation |
|---|---|---|
| Conversion variable cost | 1,400,000 × $1.20 = $1,680,000 | 1,400,000 × $0.55 = $770,000 |
| Additional owned fixed operation | No new factory fixed cost assumed in this narrow comparison | $900,000 |
| Total compared annual conversion cost | $1,680,000 | $1,670,000 |
| Steady annual cost difference | Current alternative | Only $10,000 lower before additional logistics / differences |
| Material, brand sales, qualification and logistics | Use actual ownership / contract costs | Include any differences separately; do not assume they cancel if different |
| Investment implication | No new owned-plant capital in this comparison | A $10,000 annual difference does not justify the separate $5,725,000 standalone capital by itself |
Compare proposals with the same product duty, supplier boundaries and acceptance basis. The amount below is a transparent planning example, not a market price range, supplier estimate or DPS quotation.
| Cost bucket | Assumed amount |
|---|---|
| Product / process and interface engineering | $360,000 |
| Defined configured / OEM component allowance | $1,260,000 |
| Mechanical / electrical field installation | $690,000 |
| Instrumentation and control integration | $360,000 |
| Commissioning and acceptance support | $210,000 |
| Training, documentation and closeout | $120,000 |
| Defined project scope | $3,000,000 |
| Separate site / facility additions | $1,500,000 |
| Capital contingency (15%) | $675,000 |
| Separate one-time startup / shutdown cost | $200,000 |
| Incremental working capital | $350,000 |
| Total initial cash | $5,725,000 |
The defined scope assumes applicable freight, procurement charges and taxes are included in the owner’s estimate. Add missing civil, land / shell, OEM, environmental, validation and permitting costs explicitly. Site and field conditions, duty, production access and quoted supplier scope determine actual price. Financing is excluded.
Hypothetical standalone first-factory case: $3,000,000 defined process / equipment / engineering / installation scope + $1,500,000 separate site / fit-out + 15% contingency $675,000 + $200,000 separate owner launch cost + $350,000 working capital = $5,725,000 initial cash. At 250 days × 7 scheduled productive hours/day × 1,600 good kg/h × 55% realization, potential output is 1,540,000 kg, capped by 1,400,000 kg demand. Net $4.20/kg price less $2.60/kg incremental variable cost gives $2,240,000 gross contribution; deduct $900,000 annual fixed operation for $1,340,000 steady net cash. First-year gross realization is 45%, giving $108,000 first-year net cash. All historic material, labor, energy, cleaning and maintenance savings are zero. This standalone result is not the incremental value of leaving a co-packer.
Calculated from these assumptions: steady annual net benefit $1,340,000; year-one net cash $108,000; cash payback Beyond 5 years; five-year NPV at 10% is −$1,765,346. Change the assumptions below to test a different case.
Replace the illustrative inputs with your own measured or quoted values. The five-year pre-tax model uses good kilograms, demand-capped contribution and separately verified baseline savings; it is not a project quotation.
The default is a standalone new-operation case, not an existing-plant retrofit and not the incremental difference versus continued co-packing. Historical savings are zero. Scheduled productive time and good kg/hour represent the new facility. Fixed annual operation includes $600,000 payroll / supervision, $200,000 occupancy / overhead and $100,000 service / support; incremental product labor, materials, packaging and utilities are in variable cost.
Includes contingency, startup and working capital
Incremental operating cash before tax
Includes year-one ramp assumption
At 10% annual discount
Net annual benefit ÷ initial cash
Net cumulative gain ÷ initial cash
Modeled incremental sales: 1,400,000 kg/year at $1.60/kg contribution. The demand ceiling limits sales. The base case does not recover the required discounted return within five years. Year-one net cash: $108,000.
Realization needed for the target operating payback
Not feasible
Demand, time, contribution or other cash benefits cannot meet the 5-year target under these assumptions.
CSV export is local. No inputs are submitted.
Swipe the chart to compare all five years ↔
Swipe horizontally to compare all columns ↔
| Year | Net cash | Cumulative cash | Discounted cash |
|---|---|---|---|
| Initial | −$5,725,000 | −$5,725,000 | −$5,725,000 |
| Year 1 | $108,000 | −$5,617,000 | $98,182 |
| Year 2 | $1,340,000 | −$4,277,000 | $1,107,438 |
| Year 3 | $1,340,000 | −$2,937,000 | $1,006,762 |
| Year 4 | $1,340,000 | −$1,597,000 | $915,238 |
| Year 5 | $1,340,000 | −$257,000 | $832,035 |
Swipe horizontally to compare all columns ↔
| Case | Annual benefit | NPV | Cash payback |
|---|---|---|---|
| Downside | $578,400 | −$5,306,609 | Beyond 5 years |
| Base | $1,340,000 | −$1,765,346 | Beyond 5 years |
| Upside | $1,564,000 | −$1,028,209 | 4.53 years |
Downside: installed and site costs +20%, realization ×0.75 and unit contribution reduced by 20% of its absolute value. Upside: realization ×1.15, capped at 100%, and unit contribution improved by 10% of its absolute value. The demand ceiling still applies.
Separate from the annual standalone case, compare two launch / transfer plans after feasible inventory or continued-co-packer cover. Use genuinely uncovered lost contribution and the extra transition cost. Do not add the one-time difference as an annual saving.
Prepare the information below, export the assumptions you have modeled, and discuss the unknowns with DPS. An unmeasured input is a question to resolve, not a reason to invent precision.
Checklist and model data stay in this browser until you choose to share them.
Scope a food plant feasibility study around demand, process options, site constraints and investment gates before approving detailed design or CAPEX.
Turn a food manufacturing business plan into a factory brief by translating sales scenarios, product mix and delivery commitments into production inputs.
Define a minimum viable food factory around complete vessel, utility, cleaning, packing and release interfaces, with a scoped path to later capacity.
Bring your product requirements, operating priorities and site constraints to an initial scope discussion with DPS.
