Manufacturers: How to Use a 3PL to Reduce Costs

What are Manufacturing Support Services?

For a variety of reasons, manufacturers often choose to outsource various aspects of their work to third party logistics companies, enabling them to save on recruiting, training, employment taxes, salaries and employee benefit packages.  

With the shortage of supply chain labor in many markets, many manufacturers outsource work to 3PLs in order to be able to scale their operations up and down, especially important when dealing with seasonal demand or the production or processing of seasonal goods. Manufacturing is a costly business.  Hiring and training a skilled workforce is costly and time consuming.  Having access to an outsourced workforce that is ready and able to augment your operational efforts is a solid investment, due to the cost savings and flexibility it provides your company.  With the speed of today’s consumer-oriented supply chain, relying on 3PL partnerships could create a measurable difference in the profitability of your operation and lead to greater manufacturing productivity.

Here are some of the value added services (VAI) that 3PL providers often offer to support manufacturers:

• Contract Packaging
• Contract Assembly
• Contract Manufacturing
• Supply Chain Consulting
• Distribution Services
• Kitting and Assembly

More popular than ever before in the 3PL industry, manufacturing support services are now widespread.  Knowledgeable and experienced third party logistics providers that offer manufacturing support will first want to learn about your products, processes, needs and priorities before working hand-in-hand with you to uncover potential cost savings, errors and efficiency problems.

Both parties will identify and measure key performance indicators (KPIs) to ensure that performance and effectiveness can be carefully gauged and help you continually improve these metrics. 

As part of your contract negotiation and billing discussion, the 3PL company should be able to clearly specify the rate for each particular service and identify this on the contract and invoices.

Utilizing a 3PL partner for manufacturing support helps your manufacturing business get off to a fast start.  Having a skilled workforce at your disposal helps you streamline operations and optimize lead time.    Outsourcing to a third party for manufacturing support enables you to identify weaknesses in your operation and contract for only the type of manufacturing, supply chain and logistics assistance you need for the duration you desire.  This will enable you to use the 3PL for either a long term engagement or for shorter period of time while you work to resolve problems and improve performance.

Especially important in Just-in-time (JIT) manufacturing is having an optimized supply chain and effective inventory management practices.  Using a third party logistics provider that has cutting edge technology including a warehouse management system will empower your manufacturing company to have greater access to critical real time information and inventory control.

Third party logistics providers that handle manufacturing support services are positioned to create action plans to help your manufacturing company make measurable improvements without the costly outlay of capital for additional equipment or investment in hiring and training additional employee labor.

Relying on a 3PL to provide you with manufacturing support services can help save you time and money and increase efficiency and productivity by:

Decreasing time and labor-intensive projects, such as kitting and assembly, de-kitting, etc.

Because these workers specialize in completing these types of specialized tasks, they are highly skilled and more efficient.  This can help you get this work done for significantly less than if it was done by your own workforce.

Reducing overall employment costs

Because using these services is similar in concept to relying on an agency for temporary labor, the costs will vary based upon your company’s specific business requirements.  In other words, costs will not be fixed or permanent.

Enabling you to boost productivity and focus on your core business processes

Outsourcing specific tasks may increase productivity and ensure that your workforce will be better able to focus and optimize the efficiency of critical aspects of your business.

Decrease costly training and orientation time

By outsourcing tasks to an already experienced, skilled third party workforce, your company will save time and be able to reduce the error rate.

Conclusion

Today, more than ever before, manufacturers are relying on third party logistics providers (3PLs) to act as extensions of their company.  As a manufacturer, outsourcing specific tasks to 3PLs can help you scale your operation up or down and provide you with increased flexibility in meeting order and seasonal demands.  Outsourcing to a 3rd party logistics provider can help you increase efficiency and productivity without the investment of additional equipment or hiring more employee labor.