Brands and consumer packaged goods (CPG) companies are looking for ways to improve their partnership with contract manufacturers and packagers (CM/CPs) and get into longer term contracts to unlock a different level of value.
During a brand panel at the 2022 F4SS: The Foundation for Supply Chain Solutions event, the brands expressed that this entails CM/CPs taking on the role of innovation and growth partner, meeting with the brands marketing and consumer insights teams on to ensure both companies are on the same page. Brands are looking for CM/CPs that will tell them when they are being difficult to work with and who will offer services to improve product and process innovation, including those not already included in the contract.
“We actually entered a five year supply agreement with one of our key external manufacturing partners because we wanted their innovation and the partnership. And it's their formula. Traditionally we would own all the formulas,” said Steve Weinstein, representing Johnson & Johnson.
Another aspect the panelists honed in on was digital connectivity and an interconnected ecosystem to increase transparency to share operational and production data. Especially as supply chain issues have been brought to the forefront during the COVID-19 pandemic, collaboration between brands and CM/CPs is growing increasingly important to meet deadlines.
Though these abilities are what brands are searching for, a CM or CP first needs to get accepted on as a partner and given a contract. Suggestions the brand panelists provided were to develop connections in research and development (R&D) or supply chain, etc. in order to help the CM/CP get past procurement. Being a member of F4SS and similar associations can provide opportunities to develop such connections. Otherwise, focusing on the capability statement can prove how valuable of a partner the CM/CP will be.
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