Emma Verkaik was appointed CEO of the BCMPA – the Association for Contract Manufacturing, Packing, Fulfilment & Logistics, in May 2023. Here, she tells Packaging Scotland why demand is rising for contract packing and what challenges and opportunities await the sector in 2024.
Q) How would you sum up the status of the UK contract manufacturing and packaging sector at the moment?
A) The current state of the UK contract manufacturing and packing market reflects many of the challenges that are being witnessed across the globe and domestically. The rise in operational costs and inflation are the number one challenge for UK business, and all companies have had to take a look at operational processes to ensure that they remain competitive and lean.
The well documented shortages in labour make for a competitive marketplace and the lack of warehousing stock is also a concern, but these are all areas where BCMPA members can help their customers to remain ahead of the game.
In addition to the points above, the need to address the demand by the end customer for more sustainable options, means that contract manufacturers, packers and e-commerce and fulfilment companies are all having to look to the future and explore ways in which they can provide their customers with ‘greener’ alternatives within their own daily practises.
The disruption in the supply chain over the past few years has confirmed the reliance by brand owners on their outsourced third party manufacturers, packers, fulfilment and logistics suppliers. A greater collaboration between supplier and customer is becoming more apparent, creating better outcomes. In addition, a focus on bringing the supply chain closer to home so as to be more reactive to the demands of the market as well as a move towards digitalisation to help with forecasting and planning can be seen and we very much expect these to continue.
Q) Is demand continuing to rise for outsourcing services? If so, what is driving that demand?
A) Undoubtedly there has been a rise in customers looking for outsourcing as a positive way to help them take their products to market. The value to brand owners and retailers of outsourcing during an economic downturn are multiple. It allows the customer to focus on the important business of running their own business and allows them to escape the day-to-day operational constraints.
It can also mean that, in terms of overheads, they are buying for the actual areas that they are employing and not for the overheads of a larger facility and operation which means that costs are locked in on a per unit basis and can be more easily controlled.
The range of challenges is often vast and last minute. A third party provider will have a greater visibility on these issues – using their own expertise and established and diverse supplier base to find solutions on behalf of their customers.
Q) What are some of the key benefits contract manufacturing and packing can bring for customers?
A) I might be a little bit biased but the benefits of outsourcing are immeasurable. If you can find the right party to work with, a third party supplier will become a vital component to the success of the brand, alleviating the day-to-day operational issues and allowing the brand to focus on the business of growing their business. There is such a wealth of experience and range of different services that can be drawn upon from a third party, which mean that brands can employ all of this experience to capitalise and grow their brands.
Whether a brand needs help with new product development, in procurement of packaging, ingredients, investment in machinery, or certifications/accreditations – a third party will have already spent time and money in getting the services to the standard needed and they are experienced at running production lines, understanding potential areas where there could be future challenges and also managing additional supply chains to ensure that the products are delivered on time and in the right manner.
It would take a new brand a long time to amass this level of expertise and they run the risk of losing valuable time when launching a brand as well as potentially costing more in the long run.
Q) What do you see as some of the biggest challenges and opportunities in the near future for businesses operating in the industry?
A) There is no escaping the fact that conditions are challenging but our sector is always good at finding solutions. The need to move further towards more automated processes will continue to be a motivator as well as the requirement to integrate sustainable options into the packing arena as well as the final mile.
The challenge for contract packers is to try and maintain margin when costs are rising and customers are reluctant to pay more. The changes to production lines with the impact of sustainable options are many. The packaging efficacy and its speed on a line all have large impacts for co-packers and I would hope that packaging suppliers will work more closely with third parties to understand this and help them to overcome these issues.
The opportunity lies in the fact that brands and retailers have never needed the help of third party suppliers more; this could lead to much better communication and more visibility which in turn will help with future planning. More recently a number of our members have introduced specific software which focuses on digitalisation within their facilities, and it has been an interesting development and one that I think will be key to the growth of co-packers for the future by allowing them to manage labour, process and materials more effectively and therefore deliver better outcomes whilst allowing for the future-proofing against unforeseen challenges.
Q) What are some of the big issues the BCMPA will be focusing on in 2024?
A) The BCMPA is growing, and we are looking to provide a more content-led benefit programme to our members. It will mean that we can help members not only raise the profile of their business to a wider customer base but also help them with some of the challenges that are becoming important to the end customer. Whether that be to understand and contribute to the sustainable credentials within the production process or employing greener systems within the warehouse, these are all areas which will contribute to the future success of our members.
We recently held a BCMPA membership survey and our members have confirmed the need for collaboration across the industry and the importance of networking face-to-face events. We will be holding a BCMPA conference in June 2024 and this will be the first conference since pre pandemic.
The programme will reflect the changes in the industry and focus on the needs of our members to learn more about how they can access some of the information on sustainable issues, especially for small to medium-sized companies who may not have a standalone department who can report back internally on these challenges, and they will rely more heavily on the information provided to them through their partnerships.
Q) Have you any plans to grow the number of BCMPA membership companies in Scotland? Why should companies join the trade body?
A) It is important to us that we offer a UK-wide service to any customers visiting the BCMPA website and we are delighted to welcome John G Russell, Lost Loch and RESCU Solutions from Scotland to the BCMPA this year. Scottish contract packers offer a wide range of skills and facilities and provide important services to help potential brand owners and retailers to pack and delivery their products and I am sure that we will continue to welcome others in 2024.
The benefits of belonging to a trade association are manyfold, especially when trying to establish your business and stamp its services onto the map. A trade association works differently to an independent company and is therefore able to promote the industry, and by default each of its members benefit from the increased visibility of their facility.
The BCMPA has been operating in the contract manufacturing, packing, fulfilment and logistics arena for over 20 years and has established itself as the go-to destination for brands looking to find outsourcing partners and solutions. With the well-used ‘search a member’ facility, customers can find an outsourcing partner for their projects, or ‘send a live enquiry’ into the membership. With over 200 members we actively raise the profile of our members and their services to a wide range of potential customers through our robust programme of exhibitions, PR, social media and networking events.
Membership of a trade association is not the only piece of the marketing plan, but it offers another strand to the bow, and raises the profile of its members both to outside audiences but also to the larger community, where word of mouth is a powerful tool.
