The outlook is bright for contract services providers and their customers, according to Contract Packaging & Manufacturing: Drivers of Machinery Investments, a report published by PMMI, The Association for Packaging and Processing Technologies, the producer of the PACK EXPO portfolio of trade shows.
Three-quarters of the contract packaging (CP)/contract manufacturing (CM) companies interviewed predict their business will grow year-over-year for the next three years. This is because 67% of brand owners plan to maintain or increase their current use of CP/CM services. According to the report, it’s clear that there are major advantages to outsourcing because CP/CM services provide a host of solutions to brand owners.
Hiring a CP/CM provider, according to PMMI, also allows brand owners to access machinery/packaging formats not available in-house (59%); to test new products or packaging (48%); to offer a customized product/package, especially for short or limited runs (48%); to supplement in-house capacity and meet surges in sales volume (43%), and to better serve the e-commerce channel (7%). Another 11% of brand owners rely on contract service providers to serve as their production operation, so investing in their production lines is unnecessary.
To meet the needs of brand owners, 87% of CP/CM firms plan to install new equipment in the next three years to increase flexibility (78%), expedite changeover (53%), and simplify machine operation (46%). The most popular machinery additions are in palletizing (40%), case/tray handling (35%), label/decorating/coding (32%), form-fill-seal (31%), cartoning (30%), filling/dosing (26%), bottling line (25%), and wrapping/bundling (22%).
The report, produced in conjunction with DDR/Reach, also describes the array of CP/CM services offered, capabilities providers should possess, and challenges in the segment such as labor shortages, timely delivery of supplies and machinery, and effective management of growth, throughput, and scheduling.
The CP/CM segment will be represented at PACK EXPO International (Nov. 3–6, 2024; McCormick Place, Chicago) where brand owners and service providers will find many opportunities to network, participate in free educational presentations, and see the latest technology innovations.
