With unprecedented unpredictability in the marketplace now seemingly the norm, the increased reliance on third-parties to provide solutions is here to stay.
Emma Verkaik (pictured), Membership & Marketing Director of the BCMPA, comments: “Brand owners, retailers and start-ups alike have increasingly sought out the expertise provided by BCMPA members in the contract manufacturing, packing and logistics sector to resolve material shortages and minimise delays, ensuring that the shelves remain filled with their products.”
“These ongoing challenges have helped to cement the relationships between suppliers and customers and allowed them to focus on their own businesses and marketing strategies, whilst leaving the manufacturing and logistics to the experts,” she adds.
This growing interest has been evidenced at the many shows that the BCMPA has attended and exhibited at this year, particularly the BCMPA sponsored Contract Pack & Fulfilment Show at Packaging Innovations in May, with a wealth of new enquiries about long-term partnerships being received by members.
The potential benefits have become ever-more attractive to customers searching for additional production capacity, and where outsourced facilities are helping to overcome the UK-wide shortages in warehouse capacity, in part brought on by the growth in on-shoring of manufacturing and the need to maintain strong stock levels.
The continued uncertainty surrounding events in the Ukraine has also emphasised the need to have supplies in stock. For brand owners, investing in new machinery is not currently an option due to the very extended lead times.
This, combined with ongoing investments in sophisticated stock systems by contract manufacturers is helping them to assist in the more accurate forecasting of future stock levels.
“Some of our members have taken the strategic view to hold larger stock levels than normal on both packaging and ingredients, and this is benefiting them by enabling smoother production scheduling,” says Verkaik. “Outsourcing partners already have the equipment, capacity, and experience to be able to manufacture and pack customers’ products."
Another option for brand owners and retailers is to take advantage of co-manufacturers generic products and have them produced under white or private labels.
The continued dramatic increase in online shopping, eCommerce and fulfilment makes a further compelling case for the use of outsourcing to established contract manufacturers and packers; it is attractive to brand owners and retailers to be able to scale up quickly and efficiently to meet market demand. Our members will also already hold the relevant quality accreditations that many supermarkets/retailers require.
Verkaik adds: "The array of positive benefits of using a third-party outsourcing specialist includes the avoidance of the need to undertake costly capital outlay or investment at the beginning of a project, an advantage that appeals to many brands and retailers."
"With current frequent price fluctuations across the supply chain, there is also advantage for customers to be able to agree fixed unit costs agreements and extended contracts for both production and distribution, providing for certainty in forecasting and avoiding the need for expensive, and perhaps speculative, expenditure on additional warehousing, labour and machinery.”