What the Rise in Private Label Means for Manufacturers

Posted on 
January 19, 2021
Adam Fugate
VP, Customer Solutions, Specright

Store brands have gotten quite the makeover in recent years, regarding both packaging and appearance, evidenced by consumer sentiment. Today, more than 65% of consumers believe that buying a private label store brand is a savvy alternative to a name brand. What’s more, a report from Thomas Net notes that private label sourcing activity has increased 158% year over year. This increased interest in private label brands, however, has led to a number of challenges for manufacturers:

Private Labels Create New Complexities for Manufacturers

More labels, more problems. With every private label comes a laundry list of unique requirements: formulation, packaging, labeling, logistics, and SKUs, to name a few. Multiply these requirements by an increasing number of products, and you’ve got a recipe for potential error. It takes a high level of organization and finesse to ensure harmony between all of these moving parts. Many private label manufacturers have also noted an increase in demand for flexibility from their customers. When long-time retail customers go from a single store brand to multiple brand tiers, their needs and expectations of the manufacturer also increase. All parties involved must have more flexibility in the process, which often comes with higher costs and longer lead times. A challenge in private label food products is the food safety guarantee. Retailers may have specific requirements for ingredients and nutritional values and could require manufacturers to change materials if not enough raw material is available to meet demand. This creates a new set of challenges in terms of sourcing to meet regulatory requirements, affecting upstream, and downstream supply chain operations.

Two Priorities to Overcome Private Label Challenges

The private label trend has been growing strong in recent years, and manufacturers should prepare for this to be the norm moving forward. Two things you can do to overcome the loss of control with private labels is to embrace product lifecycle management and supply chain digitization.Gaining a firm grip on product lifecycle management brings clarity to product development, from ideation to production. Keeping technical documentation together and understanding the unique needs of every customer and product can ensure much smoother production runs and minimize the potential for error. Supply chain digitization focuses on two core components: how materials are sourced and what happens after items are produced. When ingredients cannot be obtained from a first-choice source, a digital thread makes it easier to find alternative sources that also meet the stringent requirements of the customer. Digitization also simplifies the logistics for getting finished products from the manufacturer to the retailer. Ensuring a timely and accurate shipment of goods and turning the supply chain into an integrated, transparent ecosystem.  

How Specification Management Can Help

At its core, specification management software from Specright can help create a digital thread of all your private label products and their unique requirements. Companies can quickly build and access BOMs, packaging requirements, ingredient sources, and the myriad other data points to organize and manage the growing number of private label products. Download our ebook to see how specification management works and how Specright can help ease the complexities of private label manufacturing.

food and beverage

Adam Fugate

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