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Hard won lessons

28 October 2021

The performance of logistics providers during the pandemic has thrown into sharp relief the wider economy’s dependence on a robust, agile, and reliable supply chain. Emma Verkaik learns from BCMPA members how the challenges of 2020 have been formative in their handling of growth in our post-Covid world.

SINCE COVID reared its ugly head, in the world of contract manufacturing, packing, fulfilment and logistics everything, and yet nothing, has changed.

Even pre-Covid, brands and retailers had been enjoying the benefits and efficiencies of developing strong relationships with supply chain experts in the co packing, storage and delivery of their products. This increased interest had already been witnessed by many BCMPA members, who were reporting sustainable growth in demand for their services. 

“Even before the pandemic we had seen e-commerce on a strong upward trajectory,” says Gavin Williams, UK & Ireland Managing Director for GXO Logistics. “The last 18 months has seen our business have to change up a couple of gears in our efforts to service the growth in demand for highly efficient e-commerce services, an increase which is already in the order of 25-30%.”

Glenn Hayes, Managing Director of Worldwide Logistics Group in the UK has also witnessed this exponential demand at first hand: “As a company, 70% of our turnover is centred around e-commerce fulfilment. This strengthened demand for e-commerce and a true end-to-end service for clients, has seen our business grow fourfold since the beginning of 2020. We see little slowing in this trend.”

Adding value

With e-commerce customers now able to alter their purchases, the need for logistics partners to manage the returns processing end of stock flow effectively, replacing damaged items to customers, or reworking different pack options by stripping out from redundant stock or providing recycling options where stock has reached its endpoint, has become a ‘must-have’ for brands seeking third-party logistics services. Value Added Services (VAS) have become essential.

As Williams says: “During e-commerce transactions, we are the last people to touch our clients’ product before the consumer does, and they need the confidence to put their brand in our hands, throughout the process, come what may. This level of trust is paramount in the delivery of a true full-service offering.”  

End to end delivery

The complexity of today’s global supply chains has spurred a significant further increase in demand for logistics providers to cover their whole supply chain. 

Williams is confident that this trend will continue and be led by consumer demand: “Not only has the pipeline for new clients from a host of sectors, including apparel, fashion, manufacturing, and food, never been bigger, but the services they require are growing too, especially in the areas of VAS.

“From contract-packing services that deliver efficiencies and reductions in touch points for brands, to dealing with returns in the quickest manner possible, getting stock back into circulation, truly, end to end solutions are becoming the norm.”

In addition, GXO Logistics’ ‘e-commerce incubator’ as part of its VAS offer, provides access to 3PL fulfilment services for small to medium sized businesses to support their online sales through shared user platforms. These initiatives are key to the future of the sector, creating a support network for both existing and new brands.

A cleaner and greener approach

Logistics firms are experiencing growing demands for sustainability from clients. While the minimising of plastic is a focus for many brands, the issue is wider, as businesses report on their Environmental, Social, and Governance (ESG) performance. Avoidance of waste in the supply chain is key and expertise in delivering these efficiencies is increasingly important.

A strong example of this is the Linney Regenerate programme, which seeks to guide clients through creative options for repurposing, recycling and re trading waste.

Brexit in the rear-view mirror

Almost nine months since Brexit, while understandably, many other issues have occupied the minds of business, changes have had to be adapted to. 

Many BCMPA members have been at the forefront of this reshaping, devising UK based warehousing facilities with European partners, developing ‘de-risked’ secondary supply chains and maximising in-house operations. Although time consuming and initially costly, the new systems are robust and working well, and the effect of Brexit on the sector has been managed and minimised effectively.

But Brexit has not left the industry unaffected; reflecting the wider world of commerce, BCMPA members continue to experience shortages in the supply of suitable labour, despite significant wage inflation and the offer of incentive bonuses. Whilst the introduction of increased automation and collaborative robots (cobots) has eased the problem somewhat, the dearth of staff seems to be a long-term issue. 

Williams feels confident that GXO’s continuing adaptation will provide effective solutions: “The work we have put into developing strong relationships with new suppliers has minimised the effect of materials shortages and delivery difficulties for our business. Whilst still an issue, labour shortages (and the inevitable wage increased connected with them) are being successfully addressed by our investment in technology, automation and cobots.

“Every single proposal from our business now has some level of technology provision. It is a strength of our business that we are investing heavily in and by the end of the year we will have over 3,100 cobots supporting our services to clients.”

The future?

The outsourced logistics community sees positivity, opportunity, and growth in the post-Covid landscape, with the importance of the services they provide remaining at the forefront of current commercial thinking. 

Any remaining challenges presented by current labour, transport, warehousing, and materials shortages are seen as being surmountable with further effective strategic planning, the increasing use of automation and the extension of the range of in-house services that are offered. Thus, clients’ needs for a true ‘end-to-end’ service can be satisfied. 

The drive for automation to improve the efficiency of the overall supply chain continues. Often, the delay in implementation reflects the lack of practical mechanised solutions but this is easing as automation manufacturers deliver more effective products.

And, as Hayes from Worldwide Logistics adds, “Looking to the future, advancements in robotic automation will make them increasingly viable, and, after all, they don’t need pay rises, performance management and they can’t catch human viruses!”

Lesson learnt

In today’s complex world, where consumer trends can change weekly, clients are increasingly seeing the benefit of ‘leaving it to the experts’, while they focus on their brands.

The ability, recently developed, to deliver robust warehousing and stockholding contingencies that can cope with the testing ‘just in time’ requirements of the industry, and even unexpected spikes in demand (as seen in the recent fuel and transport shortages), is testament to the adaptive skills of BCMPA members and the wider industry and bodes well for the future.

While the last 18 months have been a steep learning curve, the hard-won lessons learnt have yielded robust, long-lasting benefits for BCMPA members and the wider logistics industry alike, establishing their role in the commercial cycle as no longer just desirable, but essential for brands and retailers across all sectors.

Emma Verkaik, membership and marketing director, BCMPA