The role of outsourcing
15 November 2023
Emma Verkaik, CEO of the BCMPA – the Association for Contract Manufacturing, Packing, Fulfilment & Logistics, reflects with two BCMPA members on a year of change, the growing role of outsourcing, and how the sector is playing an increasing role in delivering an ever-wider range of services for today’s brands and retailers.
AT THE end of last year our predictions for 2023 saw difficult trading conditions continuing with supply chain fragility. Raw material and labour shortages, energy costs and inflation all played their part in setting new challenges for the third-party outsourcing sector – and these in the large part have come true.
However, we also forecast that the expertise, innovation and forensic planning and adaptability of our industry would come to the fore. Having spoken to so many of our members, it is clear that partnerships, agility and an extended range of services are now delivering even greater value to a growing number of businesses.
A year of change
Undoubtedly 2023 has been a year of change. As an Association we have ourselves seen this, with the retirement of our CEO Rodney Steel, who headed up the BCMPA from 2003. Over the last two decades the BCMPA has developed into a major force, promoting the services of the UK’s contract manufacturing, packing, fulfilment and logistics sectors. Indeed, the third-party supply chain has never been more valuable than over the past few years, with brand owners and retailers relying more and more heavily on their outsourcing partners to find solutions.
The unprecedented global challenges ranging from post Covid-19 pandemic and Brexit fallout to the issues of labour shortages, changes in legislation, and the need to find greener alternatives have all resulted in more reliance on third parties.
Inflation is another one of those challenges, yet while it has had a significant impact for all businesses, BCMPA members continue to provide value. Ged Carabini, COO at 3PL and ecommerce fulfilment specialist Kammac says by focusing on achieving first-time right outcomes, this provides stability: “In these challenging times, all businesses need to work together, share the same goals, and do everything possible to mitigate the impact of inflation. At Kammac we focus on positive outcomes and best practices, and this will see us and our clients through these challenging times.”
The focus on sustainability is a major consideration for customers. Alongside the need to control costs and a right first-time approach, sustainability is a value every company is now placing at the core of their business. Glenn Hayes, Managing Director UK, Ireland & Poland at Worldwide Logistics Group sees it as integral to the services the sector delivers. “Sustainability is a mindset and one we take to every aspect of our business. All our customers are on their own journey to Net Zero and our role is essential in helping them deliver this through every small action we take,” he says.
While the concept of ‘Green Warehousing’ is becoming a focus for many across the sector, it is important to recognise that the outsourcing industry will always have an energy footprint. Reducing this impact is down to a variety of different actions and it is often the little things that add up to help deliver the efficiencies that not only provide an environmental benefit but control costs as well.
Nevertheless, chasing the lowest cost is not always the best route to driving the most positive environmental impact, but as Glenn Hayes points out, it is important to view any activities holistically: “We partner with local providers to ensure we recycle all we can to minimise our waste and reduce our carbon footprint,” he explains. “And understanding the impact of the last mile is why we continue to work with local recycling companies. While other suppliers may be more cost effective, the impact of long journeys when transporting waste away from our depots offsets the initial good work of recycling the materials in the first place.”
Indeed, as in all sectors, clarity in decision making around sustainability and avoiding potential greenwashing are fundamental. Having a roadmap is a key enabler and many companies in the sector have one in place or are developing one for the future.
“Sustainability is a big priority for both Kammac and our customers,” adds Ged Carabini. “Currently, we are transitioning all of our trucks to HVO (Hydrotreated Vegetable Oil) fuel to reduce our carbon emissions in transportation by 95%. Furthermore, we source all of our energy from a 100% renewable supplier. Nevertheless, there is always room for improvement, and we are reviewing and revising our targets and roadmap for the future so that we can start the next year with a fresh and even more ambitious plan.”
Challenge or opportunity?
Yet, while this year has delivered many challenges, these have also delivered opportunities to drive change and improvements in the sector.
Glenn Hayes sees 2023 as having had a positive impact on Worldwide Logistics Group: “In what has been a difficult year we have had the opportunity to re-evaluate our business and focus on the value we deliver to clients. Part of this has been recognising the need across our client base for an effective way to deal with returns. Through this we have created our own system and online portal, which allows consumers to book in their returned items and our clients to see them across the supply chain. This allows effective reworking that minimises waste and reduces associated costs by enabling them to be resold.”
Worldwide Logistics Group is also taking the opportunity to develop a cross-border network which avoids the financial and duty challenges of managing stock between the UK and Europe. Clearly many businesses worry about trading in Europe due to the difficulties of the current system and this has impacted on trade. “By using the knowledge, agility and support of our network the business will help take the fear out of cross-border trading and enable selling on a larger scale,” says Glenn.
Technology and digitalisation are key to enabling the flexibility and agility that customers require to ensure that their stock is kept on the shelves and delivered to their customers on time. As the new, highly agile ecommerce fulfilment landscape develops, the need for efficient, and responsive systems will come to the fore. This is affecting how BCMPA members are managing their internal systems, with software developments not only driving profitability, efficiency, and accuracy internally, but also providing greater visibility and service to clients.
Kammac sees itself as delivering a 360-degree service offer to its clients, from storage and logistics through to co-packing and ecommerce fulfilment; “Growing our business is all about the end-to-end goal; we call it 'land and expand' within Kammac, and our teams and business flow and focus are set up to achieve this,” explains Ged Carabini.
“As an example, we work with an international brewing business and what started as warehousing expanded to transport, and from there to co-packing and pre-retail services. Now, we've taken another step with them and are shipping their products out via Amazon Prime.”
End-to-end services and ecommerce fulfilment services offered by BCMPA members demonstrates the key role our industry provides in ensuring that the products and goods are readily available in store or online when we need them.