Table 7,--Principal advantages of purchasing containers 
and packaging supplies direct from manufacturers, 
1965 
Number of 
times 
mentioned 
Percent 
of 
total 
Advantage 
PLLCE sey) ove lalete ete ei elelele ies 
SCLVICCs elerevoveleleroisreiere 
CUALIEY/ wararelererotese er enere 
Most convenient source 
avallable irs, cnciete se scle 
Other 
Motal i. osteier eis esse 
priced source. Others listed discounts, freight 
savings, and credit terms as price advantages. 
Processors generally believed they were 
getting a good quality product, and ifproblems 
did occur, the manufacturer would act quickly 
to make the necessary adjustments at no cost 
to the processor. Quality advantages such as 
product guarantee and quality control were 
given by 19 percent of the cooperatives 
reporting. Some processors also believed 
there were definite advantages in having the 
most advanced product or in working closely 
with the manufacturer to obtain a specialized 
container. 
Disadvantages.=--Only 15 percent of the co- 
operatives purchasing directly from manu- 
facturers mentioned any disadvantages. A few 
cooperatives believed that insofar as manu- 
facturers required that they purchase in large 
quantities, the resulting higher inventories of 
containers and packaging supplies represented 
a disadvantage in dealing directly with the 
manufacturer. The distance required to haul 
containers, the possibility of a strike situation, 
and no other competitive source available were 
also regarded as disadvantages. 
USE OF SUPPLY COOPERATIVES 
Supply cooperatives were a minor source 
of containers and packaging supplies because 
10 
only two were reported handling such items, 
Manufacture of tin cans, found in three other 
associations, appears very successful and 
is responsible for considerable sav- 
ings, 
Advantages.--The primary advantage given 
for the purchase of containers through supply 
cooperatives or for the manufacture of tin 
cans was lower cost. Manufacturing coopera- 
tives reported that the advantages of manufac- 
ture were the avoidance of such sales costs 
as salesmen's salaries, advertising, and vari- 
ous service costs, and a reduction in admin- 
istrative overhead, 
Research and development constitute large 
expenses for major manufacturers. In both of 
the container-manufacturing cooperatives in- 
cluded in this study, very small expenditures 
were being made on these activities. In the long 
run, however, such savings in cost may be 
self-defeating. 
Disadvantages.--Disadvantages of supply 
cooperatives generally centered around serv- 
ice factors. A few processors believed that 
cooperative supply associations were gen- 
erally unable to keep sufficient stock on hand 
and to provide adequate service. Some stated 
that the use of supply cooperatives would re- 
sult in higher prices as processors can usually 
buy as cheaply as supply cooperatives, espe- 
cially where major items normally are pur- 
chased directly from manufacturers. 
The rapid rate of technological change exist- 
ing in the container industry today was re- 
garded as the biggest disadvantage of coopera- 
tive manufacture of cans. If a major change in 
technology occurred, such as widespread con- 
sumer acceptance and use of the easy-opening 
can for fruits and vegetables, the present 
cooperative manufacturing plants would be 
obsolete and other firms in the industry, which 
are spending considerable time and money on 
research and development now, would have a. 
definite competitive advantage. The supply 
cooperatives might then have difficulty in de- 
veloping a similar container, 
