Expert Insight

The following is a series of articles from DHL, written by Alastair Isbister, VP Consumer and Tradeteam at DHL Supply Chain, looking at critical supply chain topics.

Automation and manual labour - why both are vital for an efficient co-packing centre

Technology is increasingly dominating the way global businesses operate and results in more efficient processes. Therefore packaging providers may consider turning to an almost wholly automated operation. Balance is, however, key. By combining skilled staff with innovative technologies you will enhance your operations, cut costs and increase efficiencies.

Firstly, new machinery and automated solutions increase operational efficiency and reduce costs across your business. As one of the largest co-packing providers in the UK, DHL Supply Chain regularly invests in the latest technology to improve our offering.

A case assembly element of a Co-Packing activity undertaken for a major confectionery manufacturer was reviewed as part of a continuous improvement program. Following the study, benefits of an automated assembly process, compared to an existing manual assembly were clear. Having established the cost for suitable equipment, it was calculated that investment payback for a dedicated case sealer and associated motorised conveyers would be achieved within 12 months. In addition to the production efficiency gains, the quality of the finished unit improved and material waste was reduced. The mechanised solution also took up less space in the Co-Packing production area and allowed greater throughput, which had the added benefit of shorter leadtimes.

Whilst there is a large upfront investment in such technologies, in the long term installing modern, automated machinery will benefit your business. Machines that have the ability to detect small pieces of metal or other foreign objects, that may be invisible to the naked eye, will benefit your customers' reputation and improve the service you can provide.

Other technologies are available to check bar codes or expiry dates, again vital for FMCG goods. Although your team members on site are vital to operations and key to your success their time is more valuable elsewhere and taking on this activity can be time consuming and inefficient. The accuracy machinery is able to provide is again likely to be superior to that of an employee.

Equally, it is important that whilst investing in new machinery you continually invest in your team members - together they are the perfect combination. Combining the technology on site with your talented team is the best way to create an efficient operation - whilst human error will always be at play, machines too can suffer faults, breakdown or malfunction at a crucial moment in your supply chain.

To resolve this, DHL Supply Chain, place members of our co-packing team alongside our machinery to ensure it runs smoothly and any faults are spotted. By investing in the training of our workforce, we have skilled staff with the expertise to understand the machines they work with and who can resolve issues in the process quickly and effectively.

Manual operations can create more personal products a demand that machines cannot always fulfil. One key role of co-packing providers is to create adapted packs or more personal items from the initial run of products. It is easier for a machine to put the wrong item in a pack than for a member of your skilled team to do so.

It is important to invest in automated technologies, modern machinery and your skilled workforce. The best co-packing providers will understand the necessity of combining a skilled team with cutting edge technology and in doing so will increase operational efficiencies and enhance their service offering. Neglecting either side of your business in favour of the other will not reap such rewards.

Quality assurance throughout the supply chain - why it matters to the customer

Ensuring quality throughout your supply chain is vital in every sector but for manufacturers of Fast Moving Consumer Goods (FMCG) this even more of a priority. Damaged products not only fall short of consumers' high standards aesthetically but could also place consumers at risk of ill health if products become contaminated. Ensuring that products are packaged in a safe environment - for example in a clean room or temperature-controlled facility - will mitigate against the risk of contamination whilst also ensuring that products remain at a high standard throughout the supply chain.

This means that accreditations are increasingly important as retailers will select partners based on their credentials and the facilities on offer. Retailers who are eager to ensure the quality of the products they sell and of course protect their own corporate reputation, no longer see accreditations, such as The BRC Global Standards, as influential but instead as fundamental in the selection of their suppliers. The BRC Global Standards are well recognised accreditations within the industry. These accreditations guarantee the standardisation of quality, safety and operational criteria across the accredited suppliers and emphasise the supplier's ability to maintain the quality of the product throughout all stages of the supply chain.

As a result of retailers' demands, there is now a drive for suppliers to achieve accreditations. In turn, such accreditations help manufacturers and packaging providers to construct a facility that meets these requirements and which ensure that the quality of a product is maintained.

When looking to improve credentials, co-packing providers should consider creating a clean room facility, which will ensure products retain freshness during the packing process. DHL Supply Chain operates a number of accredited, clean room facilities, and understands the benefits that such facilities provide to customers to create the optimum environment for customers' products to be packed. Employees at clean room facilities wear overalls and hairnets that prevent external fibres and hair from shedding into the product. Additionally, hands must be washed with antibacterial soaps before entrance to the facility, preventing infection or bacteria from entering the clean room and thus maintaining the quality of the product.

Further to the cleanliness of a facility and the procedures in place to prevent contamination, the temperature in which products are stored and packaged in is increasingly key to ensuring the product's quality. Retailers, and ultimately consumers, will be dissatisfied with a product which has been damaged during the packaging process. If, for example, chocolates are handled at the wrong temperature, their shape, texture and appearance will likely be affected.

Temperature controlled environments are an important consideration for packaging providers who are looking to expand their offering and enhance their credentials with existing and prospective customers. Creating a space within a facility which enables the temperature to be adjusted is an important step that packaging providers must now take to ensure all products in their care retain their quality.

For manufacturers and retailers, selecting a co-packing partner who can provide versatile facilities is increasingly vital. In order to deliver an excellent product to the end user, suppliers must ensure that quality is retained throughout the supply chain and in particular during the packaging process.

Unique products and the competitive edge: why a variety of Stock Keeping Units is key

The competitive climate of the retail sector means that retailers must constantly find innovative ways to keep their prices low for consumers at the same time as increasing profits. Creating unique offers and packaging up products as deals that appeal to consumers is one way that retailers can increase profits.

Manufacturers should be aware of the pressure retailers are under to create a unique and cost effective offering to meet consumer demand. Using this, manufacturers can then consider what solutions can support a retailer's strategy. A variety of Stock Keeping Units (SKUs) enable manufacturers to create a more varied offering but in order to extend the range of products that can be offered, manufacturers often partner with a specialist co-packing supplier, such as DHL Supply Chain, who can advise during the process and create new, unique units for products to be sold in.

To keep prices competitive, retailers can stock unique products to avoid consumer price comparisons. Particularly in today's digital age where information is instantly accessible online, consumers are eager to get the best deal and will shop around, comparing prices online whilst out on the high street or visiting different retailers.

Manufacturers who can offer retailers a unique product have an advantage. In order to cause the least inconvenience to the manufacturer, co-packing partners can take the original product from the manufacturer - for example a 500g bag of chocolates which is available in various stores - and transform this into a new, unique product such as a multi-pack of mini 50g bags.

With specialised machinery and employees who understand the best way to maximise the potential of a single product, co-packing suppliers ensure that manufacturers amplify their offering and create solutions to meet retailers' needs. At many of our DHL co-packing sites, large products can be transformed into multi packs using innovative machinery in our warehouses, which is able to measure the weight of the product and create equal sized bags that can later be packed by hand into a multi pack.

Perhaps most innovative are solutions that offer manufacturers the opportunity to collaborate with another manufacturer to create one off products that may be specially commissioned by a retailer. Co-packing providers

act as the bridge between both manufacturers. They work closely with the retailer who has commissioned the new product, to combine two products so that the retailer creates a great offer for consumers. It is difficult for manufactures to open a dialogue with other businesses operating in the same sector as it is important that a competitive advantage is maintained; partnering with a co-packer therefore offers manufactures the opportunity to combine products, and create new solutions for retailers whilst maintaining the invaluable competitive advantage.

As retailers demand innovation and look to manufactures that can give them an edge over other retailers, considering a partnership with a co-packing provider will increase efficiencies and create solutions for all.