When comparing the raw material costs of in-house production with the purchase of ready-made
water-based dispersions, one might initially assume that manufacturing in-house is cheaper. However, a true cost comparison must account for various additional factors involved in in-house dispersion production.
In-House Dispersion Production: Hidden Costs You Should Consider
When producing dispersions in-house, several hidden costs go beyond raw materials. These include capital investment in equipment, maintenance, labor, energy, and waste disposal. You also face quality control expenses, higher regulatory compliance costs, and potential losses from inconsistent product quality. Factoring these hidden costs often makes outsourcing dispersions a more efficient and cost-effective choice and they are as follows:
- Cost of non-active ingredients
- Capital investment in plant and equipment for dispersion manufacturing
- Maintenance costs, including the need for spare parts
- Laboratory expenses for quality control, including equipment and operations
- Inventory management costs for multiple raw materials, including staff, storage, and financial outlay
- Space costs for in-house production, factoring in both the actual cost and potential opportunity cost of using the space for more profitable activities, like mainline product manufacturing (e.g., gloves)
- Labor costs for production and quality control
- Energy costs, typically electricity, for mixing, milling, and packaging
- Waste disposal costs, including effluent treatment and packaging waste
- Risk of production downtime due to dependence on in-house dispersion
- Potential losses from inconsistent product quality
Comparing In-House vs. Outsourced Dispersions: What’s More Cost-Effective?
Compared to specialized manufacturers, in-house production typically operates at a smaller scale, leading to:
- Higher fixed and capital costs
- Greater material waste
- Lower purchasing power for raw materials
- Increased regulatory compliance costs per unit
- Higher labor costs per unit
Considering all these factors, it’s clear why many companies opt to pay a slightly higher raw material cost to outsource their dispersion needs. The slight increase in cost can lead to significant long-term savings and efficiency.
How significant is the cost increase? Imagine securing high-quality dispersion with just a Rs.0.01302 price bump
For instance, I.R. Tubes Pvt. Ltd. conducted a cost comparison based on standard formulations, revealing a minimal difference of Rs. 4.34 per kg (Rs. 140.88 for market chemicals vs. Rs. 144.82 for our chemicals). This translates to just Rs. 0.01302 per piece of a female condom (assuming a weight of 3 grams). This marginal cost increase makes outsourcing a financially attractive option.
The Financial Impact of Outsourcing Dispersion Production
Table 1:
| COSTING AT MARKET PRICES |
|
|
|
| Ingredients |
Qty. (Kgs) |
Cost (Rs.) |
Total Cost (Rs.) |
| 60% NR Latex |
167.00 |
140.00 |
23,380.00 |
| 60% Sulphur |
1.50 |
24.00 |
36.00 |
| 50% ZnO |
0.50 |
224.00 |
112.00 |
| 50% ZDBC |
1.00 |
187.50 |
187.50 |
| 50% ZMBT |
1.00 |
197.50 |
197.50 |
| 50% Anti-Oxidant |
1.00 |
250.00 |
250.00 |
|
|
|
|
|
172.00 |
|
24,163.00 |
| Per Kg. Cost |
|
|
140.48 |
Table 2:
| COSTING USING CHEMICALS FROM I.R. TUBES. |
|
|
|
| Ingredients |
Qty. (Kgs) |
Cost (Rs.) |
Total Cost (Rs.) |
| 60% NR Latex |
167.00 |
140.00 |
23,380.00 |
| 60% Sulphur |
1.50 |
135.00 |
202.50 |
| 50% ZnO |
0.50 |
224.00 |
112.00 |
| 50% ZDBC |
1.00 |
350.00 |
350.00 |
| 50% ZMBT |
1.00 |
390.00 |
390.00 |
| 50% Anti-Oxidant |
1.00 |
475.00 |
475.00 |
|
|
|
|
|
172.00 |
|
24,909.50 |
| Per Kg. Cost |
|
|
144.82 |
Conclusion: Why Outsourcing Dispersions Can Lead to Long-Term Savings and Efficiency
Considering all the factors, paying a reasonable raw material cost for outsourced dispersions is a sound business decision. At I.R. Tubes Pvt. Ltd., all our products are RoHS and REACH compliant, consistently meeting customer satisfaction. We offer competitive pricing, flexible quantities, and unwavering quality.
As distributors of quality chemicals from Deutsche Oelfabrik (Germany), Robinson Brothers (UK), Emery Oleochemicals, and Aquaspersions, our products cater to the rubber, plastics, latex, adhesives, and sealants industries.
