Josephine Coombe, Managing Director of Nulogy in Europe, looks at some of the key trends in the contract packing and manufacturing sector during 2022 and the lessons for the coming year.
Contract packing is growing in importance. According to Precedence Research, the global market will be worth $105 billion by 2030, growing at a CAGR of 7.7 per cent. Many of the goods and services we buy exist only because of the contract packing sector and with requirements clearly growing amidst growing unpredictability in the market, now is an opportunity to reflect on trends in the industry, and how contract packers and their customers can adapt best to their impacts.
Speed and Adaptability
Conditions over the past year have undoubtedly spurred contract packers and manufacturers to a new level of adaptability and speed, as they react to unpredictable consumer preferences and unstable retail channels. To stay ahead of the curve, brands and contract packers have leveraged digitalisation to connect and collaborate, better track order milestones and quality, and optimise shop floor processes. Allowing co-packers to shed outdated manual procedures, digitalisation has been a major tool for successful operations enabling higher levels of responsiveness and agility in the brand and supplier partnership.
Labour and capacity
It has become clear that digital transformation has become essential for the logistics sector when dealing with labour constraints. With the aftershocks of Brexit and COVID as catalysts, coupled with industry strikes and staff leaving their jobs in record numbers, many organisations have been overwhelmed by worker-retention challenges and a rise in labour costs this year.
Digital solutions like Nulogy’s Shop Floor Solution for contract packers have helped many businesses manage and optimise their labour, mitigating against drops in productivity. In addition, software can protect co-packing businesses from key personnel dependence as critical operational knowledge is captured in the system itself rather than remaining locked in the heads of specific employees.
With digitalisation, if an employee leaves or is absent, process information and historical knowledge are retained and actionable within the business, even by less experienced staff, minimising reliance on a few key people to keep the business moving forward.
With staff shortages likely to continue into the foreseeable future, business leaders need robust strategies to stay ahead.
Sustainability and accountability
As the industry focus shifts towards greener supply chain management, many businesses are facing the challenge of maintaining quality and safety while improving environmental credentials. Suppliers are under increasing pressure to reduce the environmental impact of their operations. With the plastic packaging tax coming into full force in May 2022, combined with the introduction of environmental, social, and corporate governance (ESG) and a rise in consumer awareness, many brands are progressively seeking out partners with sustainability-first mindsets.
Here again, digitalisation has a fundamental role to play, helping to reduce impact on the environment through efficient management of stock and avoidance of waste. By knowing precisely what stock exists in a business, and its status, or where it is within the supply chain, digitalisation enables better decision making and avoidance of waste from potential over-stocking and obsolete inventory or the expediting of rush deliveries.
Making use of contract packing trends in 2022
It is safe to say that the last 12 months could be described as unprecedented and challenging. However, the contract packing sector has been at the forefront of change, effectively pivoting itself to meet challenges head on, empowered by digitalisation.
As we enter a new year, unpredictability is inevitable, but contract packing organisations who have embraced digital transformation have built the agility and resilience to meet whatever lies ahead on the horizon.
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