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Software for contract-packing: the missing element

03 February 2023

Josephine Coombe, managing director of Nulogy in Europe, highlights the many benefits purpose-built contract packing software is bringing to leading logistics providers’ value-added services.

WITH THE volatility of the past few years, effective supply chain management is more critical today than ever before, and so it is no surprise that third-party logistics organisations (3PLs) are leveraging technology to increase the efficiency of core functions such as finance, planning, safety, transportation, and warehousing through digitalisation of their operations.

However, an area which is often overlooked is the co-packing operations which operate alongside traditional warehousing activities as a value-added service, and are, for many, a growing and increasingly strategic revenue opportunity.

Contract packing: A misunderstood field

Contract packing is often disregarded during a 3PL’s digital transformation strategy and largely for misconceived reasons. The justification for neglecting the area is often that the area is too labour-intensive to be managed with software. Ordinarily involving highly labour-intensive production lines in which goods are reconfigured into new formats or displays often by hand – gift packs, retail displays, multi-packs and so forth — contract packing places a heavy reliance on handwork. It is therefore perceived as an activity enabled primarily by people, rather than by technology. Machinery may be in place to augment and accelerate steps, but people are frequently the main actors. It is assumed that the co-packing workflow is too complex and unique a process to be digitalised. Yet this is not the case.

The missing component in WMS

Many 3PLs will have already invested in warehouse management systems. However, these systems have a blind spot in their workflow when it comes to co-packing operations, as such systems offer only very basic kitting functionality at best. While many WMS claim to have functionality in place to meet contract packing requirements, the reality is that once stock leaves the warehouse for the co-packing production floor, logistics providers are left with poor transparency and visibility. 

WMS is designed to provide visibility into materials and inventory in the warehouse itself, but it can’t track those materials and inventory as they move through the contract packing production process and are transformed into finished goods. A WMS also provides no insight or management capability for optimising labour allocation on the co-pack line and so the ability to effect change and improve efficiencies and minimise waste through these processes is not seen.

Visibility enabled  

Thankfully, cloud-based software platforms exist that are purpose-built for co-packing operations to illuminate and optimise labour-intensive lines, providing invaluable insights into productivity, inventory, quality, and more. Providing complete visibility from estimating and scheduling the job, through production, and quality control, purpose-built co-packing software lights up an area that is often currently a black box in a 3PL’s operation. In addition, compelling real-time dashboard capabilities combined with powerful reporting allows contract packing operations to get a better pulse on performance and ensure continuous improvement with higher quality data on hand. And most importantly, the seamless integration with existing WMS and ERP systems, allows both logistics providers and their customers to collaborate easily and make real-time, data-driven decisions. A system such as Nulogy can supplement a 3PL’s digital landscape, augmenting and complementing many warehouse management systems such as Blue Yonder.

Adding value to a WMS 

With brands seeking to differentiate their product offerings through late-stage customisation, contract packing has become a major opportunity for 3PLs strategic growth. As such, those who focus more intently on this part of their warehousing activities, eager to win a larger share of work traditionally undertaken by specialist providers, will see success. 

By delivering value on the shop floor as well as the strategic business level, co-packing software is a hidden gem of opportunity for organisations looking to stand out from the competition and unlock strategic revenue growth.  

For more information, visit www.nulogy.com