~ Important Notes:Do this with a copy of your mods folder instead of the original, for backup purposes and in case you need the single files later.
Organize the files you want to be merged together in folders. For example, put hair files together, accessories, clothes, makeup etc. This will make the process easier!!
✽ Click images to see larger view
In the example below, I'll be merging cc hair files.
~ How to Merge CC Hair:1. Open S3PE and click File New

2. Right-Click and select Import As dbc.

3. Browse to where your CC is that you want to merge. Select all the hair files (for example) you want merged together and then Click Open.
** Click on first file, then Shift-click the last file to highlight all files.

4. Give the file a name. (Merged_CCHair.package) Close program when finished.
-- Depending on how many files you have to merge it may a few minutes.

I've noticed that my merged hair file is a little bigger than all the single hair files put together. However, computers handle bigger files better than a whole bunch of little files, so it might be good even if it's just for that reason.

Right-click selected files and get the number of bytes from the properties. - Use Ctrl and click the files to select only a few files.
I was surprised the game seems to be loading pretty well with the merged files. Though I don't feel this is a true test, since I don't have very much custom content to begin with.
However, when I tried to load Sims 3 earlier this year with the posters being all little individual files, poor game was trying to choke. And with all those same little files merged, it's handling it a lot better.
Some say this can be done with some store content if they're in .package format. Thinking mostly the accessories, furniture, clothes and hair. None of the interactive/premium store content like the tablet, bakery, wood fire oven, grill, etc. should be merged due to interactive items have animations/moodlets associated with them. They may not function as designed.
Helpful Links/Information on Merging Custom ContentHow To: Merge Your Custom Content | The Sims 3
https://www.youtube.com/watch?v=jIZ2LdoT-HYTutorial for Dummies: How to Merge CC Using S3PE!
http://superoriginalsimsblog.blogspot.com/2016/01/tutorial-for-dummies-how-to-merge-cc.html