3 Takeaways from the 2021 CPA State of the Industry Report
We summarize Carl Melville’s 2021 CPA State of the Industry Report with 3 ways technology can help CP/CMs stand out as valued business partners to brands.
Contract packaging and manufacturing (CP/CM) industry veteran Carl Melville recently published the 2021 edition of the Contract Packaging Association State of the Industry Report, a comprehensive research study compiled from survey and interview data with more than 150 CP/CM leaders. This edition of the report covers the past 18 months of the pandemic, and offers unique insights into the trends that have been introduced or accelerated as a result of COVID-19.
To kick off the launch of the report, Nulogy partnered with Carl Melville for an exclusive webinar covering key trends in the report—and how contract packagers and contract manufacturers can leverage the findings to best plan for success in the future. While it would be a tall order to summarize the State of the Industry Report in just one blog post, we highlighted three ways in which technology can help CP/CMs address these industry trends and strengthen their relationships with brand customers.
The past year has delivered a barrage of disruptions to the contract supplier industry, from pandemic conditions to labor shortages. Despite these disruptions, customer demand and financial growth opportunities within the CP/CM industry are greater than ever: according to Carl Melville, contract packaging and manufacturing industry revenue is expected to grow at a 10.2% compounded annual growth rate (CAGR) through 2025.
Competition within the industry, however, is fierce, and margins are lean. What can CP/CMs do to stand out from the crowd? Melville believes that technology can aid greatly in this arena.
“CPCMs are investing more to evolve their sophistication in technology. They are now using technology as a sword instead of a shield.”
Evolving software sophistication on the shop floor not only helps optimize operations for improved profit margins and service levels, but can also help integrate more closely with brands for stronger relationships, as we’ll discuss in the next point.
Traditional supplier-brand relationships have been largely tactical and transactional, wherein each party keeps the other at arm’s length. With the disruptions seen in the past year, many of these parties are re-evaluating their relationships to unearth new possibilities for collaboration and data sharing, which in turn can become building blocks for strategic partnerships and sustained growth on both sides of the relationship.
“More complex technological investments are required as CP/CMs seek greater integration in their branded customer’s business.”
How can technology help? A digitalized shop floor can enable CP/CMs to capture production data in real time and share it with brand customers, which builds a relationship based on mutual trust and collaboration. In order to stand out as a truly collaborative supplier partner, however, the right technological capabilities (such as integrations and standardized data) must be in place in order to share data and communicate more seamlessly.
Melville stressed that the technology is nothing without the mutual desire for collaboration. To illuminate this point, he highlighted six common features of successful modern CP/CM-brand relationships:
Melville concludes that despite the challenges, optimizing the brand-supplier relationship has never held more opportunity for growth and success.
Another consistent industry trend is the increasing desire from consumer brands to ensure environmental responsibility within their supply chains. In addition to offering more opportunities for collaboration as a service differentiator, contract suppliers can further stand out from the pack by demonstrating their ability to reduce waste and water usage in their operations. Optimizing production efficiency through the use of technology can further accelerate these improvements for contract suppliers.
“Currently in the industry, sustainability is on everyone’s lips. While people forgot about sustainability during the 2008 recession, the conversation didn’t skip a beat during COVID.”
Carl Melville’s findings in the 2021 State of the Industry Report have shown that the contract packaging and manufacturing market is only gaining steam in competition and profitability. Despite the challenges ahead, a wealth of opportunity exists for contract suppliers who are equipped to help brand customers ride the wave of a resurgent consumer market.
Click here to watch the full webinar recording.