Outsourcing’s expanding role

RISING COSTS, stricter regulations, and heightened consumer expectations have driven the demand for outsourced services such as contract manufacturing, packing and fulfilment. By offloading operational tasks to free themselves to focus on strategic goals and innovation, businesses can gain a competitive edge.

Several emerging trends are reshaping the way brands and retailers engage with their outsourcing partners. From advances in technology and automation to growing commitments to sustainability, outsourcing providers are offering more flexible, tailored solutions that can adapt to the fast-changing needs of the market. These developments underscore the expanding role of third-party logistics (3PL) services in supporting business growth and agility.

Value-added services

In an increasingly competitive marketplace, outsourcing partners are offering more value-added services (VAS) to help brands differentiate themselves. These services go beyond traditional logistics operations, providing businesses with additional capabilities such as custom packaging, kitting, labelling, and even reverse logistics for handling product returns.

For brands, VAS offer a way to enhance the customer experience without the need for in-house investments in specialised resources. Whether it’s personalised packaging, product bundling, or efficient returns management, outsourcing partners can help businesses deliver a superior service to their customers, while at the same time remaining agile and cost-effective.

Outsourcing providers are also customising their services to meet the unique demands of specific industries, such as healthcare, personal care, automotive, and food & drink. In these sectors, compliance with strict regulatory requirements and addressing niche market needs are essential. By offering tailored solutions that meet industry-specific regulations – such as sterile packaging for healthcare or specialised handling for automotive parts – third-party logistics providers and contract packers bring deeper expertise and a customised approach. This industry-specific specialisation allows them to align more closely with the unique challenges and standards of each sector, ensuring that brands receive not only logistics support but also compliance-driven, bespoke services.

Managing risk

Recent global disruptions, including geopolitical conflicts, labour strikes at major global ports, and inflationary pressures on fuel and logistics costs, have increasingly exposed weaknesses in supply chains, underscoring the need for greater resilience. Today’s brands face not only traditional risks – late delivery or poor quality, for example – but also new challenges such as economic instability, cyber threats, and fluctuating energy costs. As a result, companies are turning to outsourcing partners for more sophisticated solutions that can help to manage these risks and fortify their supply chains.

Businesses are prioritising nearshoring and reshoring strategies to bring production closer to home, reducing reliance on distant suppliers and mitigating risks associated with long lead times and global trade disruptions. This trend towards localisation not only bolsters supply chain resilience but also aligns with growing pressure to meet sustainability goals by reducing emissions from transportation.

Outsourcing partners are stepping up by diversifying supplier networks, adopting advanced risk management frameworks, and integrating digital tools like AI-driven forecasting to predict and respond to potential disruptions. For brands, working with logistics providers that offer contingency planning and operational flexibility has become essential for maintaining business continuity amid such ongoing uncertainties.

Digital tools

With the increasing volatility in recent years, effective supply chain management has become more critical than ever. 3PL providers are now leveraging technology to enhance the efficiency of co-packing and manufacturing operations, offering these as VAS. This technological integration includes sophisticated software systems that manage end-to-end contract packing processes, as well as real-time data analytics for improved inventory control and decision-making.

Advanced Warehouse Management Systems and Enterprise Resource Planning solutions, such as SAP, are being utilised to streamline warehouse workflows. These systems provide enhanced visibility, automate complex processes, and improve accuracy in product management. Additionally, the implementation of advanced robotics has increased precision and efficiency in production and packaging operations, while the Internet of Things sensors offer real-time monitoring and tracking of products throughout the supply chain, ensuring better quality control and operational transparency.

In the UK, BCMPA members are at the forefront of integrating such technological advances into their co-packing and manufacturing services. By adopting these innovations, they are able to provide more agile and responsive solutions to their clients, helping streamline operations, reduce costs, and improve service delivery. This enables businesses to adapt to evolving market demands and maintain a competitive edge.

Sustainability

Sustainability continues to be a key priority for brands and their customers – a topic that was focussed on this year by brands at the BCMPA Conference. As businesses look to reduce their environmental footprint, they are increasingly turning to their logistics and outsourcing partners for support in achieving their sustainability goals.

Many 3PLs are adopting green logistics practices, such as optimising transportation routes to reduce fuel consumption, investing in hydrogen powered or electric vehicles, and using eco-friendly packaging materials. The concept of "green warehousing," which involves the use of renewable energy sources such as solar power and energy-efficient lighting, is also gaining traction as companies strive to reduce their carbon emissions.

Sustainability reporting is another area where outsourcing partners are playing an important role. Many businesses are demanding greater transparency from their logistics providers, requiring detailed data on carbon footprints, waste reduction, and other environmental impacts. This level of transparency helps brands meet their corporate social responsibility commitments and respond to increasing consumer demand for eco-friendly practices.

Customer-centric solutions

Another significant trend is the rise of personalisation and customer-centric solutions within outsourcing services. As consumer expectations evolve towards more tailored experiences, outsourcing partners are developing bespoke solutions to meet these demands, including customised packaging and product configurations and personalised delivery options. Such   enhancements to their capabilities enable them to support brands in delivering unique customer experiences.

This trend reflects a broader shift towards meeting individual customer preferences and improving satisfaction. By leveraging advanced analytics and customer data, outsourcing providers can help brands create highly personalised interactions and streamline their processes to better serve their target audiences. This not only drives customer loyalty but also enables brands to differentiate themselves in crowded markets.

As the marketplace continues to evolve, the expanding role of outsourcing in logistics and supply chain management becomes increasingly evident. From integrating sophisticated software systems and robotics to embracing sustainability and personalisation, contract manufacturing and packing partners are delivering tailored solutions that meet the complex demands of today’s brands and retailers. Looking ahead, BCMPA members' dedication to continuously adapting to industry demands will ensure that outsourcing remains a key driver of value and resilience in this dynamic landscape. Strengthening collaboration between brands, retailers, and their third-party partners will undoubtedly fortify supply chains for the future.

Emma Verkaik, CEO of the BCMPA – The Association for Contract Manufacturing, Packing, Fulfilment & Logistics