How to address order fulfillment concerns as supply chain disruption persists.
By Jason Tham, CEO of Nulogy
With the 2021 holiday season in full swing, co-packers are naturally concerned about how to continue fulfilling orders on time, especially as COVID-19 cases surge and supply chain disruption persists. Keeping brands and their customers happy amidst so much volatility and uncertainty is challenging, particularly under more traditional partnership models.
Whereas it used to make sense for co-packers to operate independently, relying solely on their own capabilities and expertise, the solution to working effectively with brands going forward requires a new way of operating – one that prioritizes collaboration to drive supply chain agility and resilience. The key is for co-packers to lean into a multi-enterprise approach to supply chain management.
Under this approach, consumer packaged goods (CPGs) companies extend their digital solutions openly with co-packers and contract manufacturers – and vice versa – enabling all parties to share data and insights with one another. When this visibility and openness exists, co-packers and their brand customers are able to work better together and ensure everyone is always on the same page.
How Digitization Elevates the Supply Chain
Supply chain problems exist today in large part due to a lack of transparency between CPGs and suppliers that makes collaboration hard. Historically, co-packers and contract manufacturers didn’t need to provide real-time data streams or ongoing updates to brands about their activities because the global economy moved at a much slower pace.
CPGs could focus on forecasting, while external suppliers could focus on fulfilling orders. The two sides didn’t need to maintain an always-online of communication for solving complex problems or navigating unforeseen challenges. But commerce, online and offline, is accelerating, and consumers are flexing their buying power, putting pressure on brands to deliver goods faster than ever without sacrificing quality. This pressure is now rippling out to co-packers, forcing them to adapt their own operations.
Brands and co-packers alike are trying to figure out ways to streamline workflows, communication and information-sharing in hopes of speeding up the overall supply chain. What makes this change difficult is many years of siloed operation, limited technical sophistication, and an overall lack of necessity – until now.
Fortunately, there are digital platforms out there today that open up the potential to change the legacy paradigm. Through digitization, brands are replacing cumbersome, monolithic ERP systems with extendable software that all organizations across the supply chain can leverage to modernize outdated processes.
In other words, co-packers are now being invited to participate in digitally-powered supply chain ecosystems that are more fluid and transparent. They can use these digital platforms to give brand customers more insight into their inventory and scheduling. They can also digitize order management, materials tracking, analytics, capacity planning, and more, eliminating the need for analog recordkeeping (i.e., using spreadsheets and paper documents). This information can be extended up and down the supply chain, giving multiple stakeholders the ability to make better decisions based on real-time information.
Digitization illuminates the “black box” that has prevented co-packers and brands from achieving their fullest partnership potential. It creates end-to-end supply chain visibility, which is the ultimate efficiency catalyst. Digitizing production floors enables more people to capture shop floor data, evaluate stock and participate in response efforts to massive overnight demand surges. And when brands and their external supply partners have access to the same information, they can collaborate more effectively, solve hard problems, minimize errors and cut wasteful processes that get in the way of fulfilling orders quickly and on time.
What we’re after is two-way collaboration – cooperative relationships in which co-packers can support brands in their efforts to build more agile and resilient supply chains.
Digitization to Combat Supply Chain Disruption and Enable Multi-Enterprise Supply Chains
Building on the idea of collaboration, the key to dealing with supply chain disruption today is to leverage digitization to cultivate multi-enterprise supply chains in which all stakeholders stand on equal footing, including co-packers. The multi-enterprise approach preserves the advantages of specialization while making the entire supply chain run more smoothly, even as it speeds up.
The COVID-19 pandemic revealed how fragile supply chains can be in turbulent times. In a world with next-day shipping, multinational supply chains, and sky-high consumer expectations, there’s little room for shipping errors or delays. Supply chains have to be able to adapt quickly to new trends or disruptions in the marketplace and keep customers satisfied in the process
The only way to achieve this end is to implement digital tools that break down communication silos and give everyone a clear view of what’s happening across the supply chain. Doing so transforms relationships between CPGs and co-packers into strategic partnerships that are better equipped for the modern economy.