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JOSEPHINE COOMBE, Managing Director of Nulogy in Europe, identifies the catalysts behind co-packers and co-manufacturers deciding to invest in the latest software solutions and supply chain technology.
The future of supply chains is being transformed globally by the development of a more digitised environment, where value chains are connected, collaborative, and performance driven. But digital transformation can sometimes seem a daunting prospect for external manufacturing and packaging businesses that have relied on legacy systems or manual processes – sometimes for decades. Yet, the change management hurdle does not have to be insurmountable, and the huge advantages of investing in supply chain technology can prepare businesses for a new era.
Meeting Growing Demands
One of the primary considerations in any investment starts with assessing customer demands and the value a new system will deliver to meeting their needs. Co-packers often realise that they need to digitalise precisely when their business is becoming more successful. Growth necessitates a scalable operation. Thus, if an organisation is displaying signs of expansion, this is often a signal that change is needed.
Continuing to rely on outgrown systems just as a business is taking flight is highly risky. If you’ve been fortunate enough to earn a significant increase in business volume from your brand customer, the last thing you need is for your brittle legacy systems or cumbersome spreadsheets and manual processes to let you down. What’s more, major FMCG firms are bringing higher expectations around the responsiveness of their contract suppliers, and with that, expectations around digital sophistication to enable that improved service. Trading PDFs, voicemails and emails is no longer best practice, when collaborative real-time data sharing is possible. Evaluating if your current systems are adequate to cope with the businesses’ growing needs – now and in the future – is therefore essential.
Reaping the Rewards
Leaders who have embraced digitalisation in the past are now reaping the rewards in the present. For the likes of supply chain firm, The Keswick Enterprise Group, investing in Nulogy’s purpose-built platform for co-packing has played a key part in optimising the operations of their two FMCG-focused co-packing subsidiaries, SGL and APS.
“For external manufacturers and co-packers, the decision to digitise is a big investment, however it is important not to be daunted by change. Before we invested in Nulogy we found ourselves thinking of tomorrow’s likely requirements and questioning if our pre-existing systems of today could cope,” says Director, Gavin Withers. “High quality products for customers demand high quality operations. Since our initial investment, Nulogy has been an important partner in helping to drive greater efficiencies through the functionality and developments made to their software.”
Delivering Quality and Sustainability
Investing in technology also enables co-packers and contract manufacturers to align with more strategic goals of brand customers. Sustainability, for example, has evolved to become a major focus area for FMCG brands, but with external supply chain partners managing materials and inventory, the potential for waste is considerable. Through digitalisation, however, co-packers can better identify and manage inventory allowing for the reduction of supply chain waste. In addition, with a better view into materials, suppliers can identify near-expiry inventory to reduce obsolescence.
In addition to reducing waste and increasing sustainability efforts, a digitised platform delivers other benefits, particularly when it comes to traceability and recall readiness. Traditional supply chains relying on paper-based systems often face logistical challenges in the event of product recall. Tracking down and quarantining specific products using dated methods can be time-consuming and error prone. Digitalisation permits fast and easy tracking of materials and inventory at the batch and item level, and traceability takes minutes rather than days.
“Quality is integral to all co-packers and manufacturers, as we are in essence custodians of the brands we are working for,” adds Withers. “Checking our processes is therefore an everyday part of our business and testing these is also a big part of any regulatory audit undertaken. Having the ability to isolate stock and prove traceability at the touch of a button is invaluable and allows our team to do things faster and more effectively and, above all, give them more thinking time to perform the other parts of their roles.”
For external manufacturing and co-packing suppliers considering investing in digitalisation, it is clear this move can increase efficiency, quality, and profitability while reducing risk and costs. Most importantly, suppliers can strengthen and optimise service to their brand customers and earn the reputation that will win them more business. Ultimately, many innovative leaders recognise that seizing growth opportunities demands the readiness to embrace change. And those who do so come out on top.