Manufacturers: How to Use a 3PL to Reduce Costs

Being a manufacturer in today’s economic climate can be difficult to navigate. From dealing with supply retention, inventory, construction, payroll, and more, regardless of the industry, a manufacturer must wear multiple hats to keep their businesses operating strong. Since all of these daily tasks can be complex and time-consuming, many manufacturers rely on 3PL’s or a third-party logistics provider to help them with manufacturing support services and more.

Noted below are a few of the ways manufacturing companies use a 3PL to help reduce costs.

What Manufacturing Support Services Are Offered by a 3PL?

There are several reasons why a manufacturer would outsource a few aspects of their business to a 3PL. First and foremost is the ability for a manufacturer to allocate tasks they might not be completely efficient or proficient. Regardless of the reason, there are several specific manufacturing support services that a third-party logistics company will provide for their manufacturing clients including:

• Processing returns or reverse logistics
• Sub-Assembly or Parts Configuration
• Purchase order management and sourcing
• Last mile logistics and carrier planning
• Contract manufacturing, assembly, and packaging
• Supply Chain consulting and distribution services

While they used to be only offered by premium 3PL’s, the manufacturing support service is quickly becoming mainstream. The experienced 3PL’s have a wide variety of experience with these support services, which permits them to offer more value and cost-savings. The knowledge-base of an experienced 3PL also allows a manufacturer to learn from them to improve their operations.

Before a manufacturer allocates manufacturing support services to a 3PL, it’s important for the two companies to spend time learning from each other. For the 3PL, it permits them to review the manufacturing company operations, products, needs, priorities, struggles, and opportunities for growth. The manufacturer in-turn has the opportunity to get to know the 3PL and their complete offerings. It’s truly a win-win situation for everybody involved.

How Does a 3PL Help to Reduce Manufacturing Costs?

Relying on the experience of a 3PL provides a manufacturing company with multiple benefits – but without question, on top is the cost savings. However, saving money isn’t always a dollars and cents bottom line factor. In many instances, finding ways of improving productivity and efficiency will have a more dramatic impact on the balance sheets – which is where the best 3PL’s accelerate over their competition.

A few of the specific areas where an experienced 3PL can help a manufacturing company reduce costs include:

• Taking on time-absorbing and labor-intensive projects such as assembly, processing returns, and reverse logistics programs. When a 3PL is asked to take on these tasks, they employ people who specialize in them. This makes them more efficient and completes the tasks with a higher focus on quality. In the end, the manufacturing company will save money on payroll, expenses, and reduce the potential of mistakes made in these segments.
• Reducing overall employment cost: Quite often, when a company retains a 3PL to take on projects, they are not full-time positions. Depending on the manufacturing company, there might be certain times of years where volume increases and hiring a 3PL for temporary labor will cut the need to hire employees, spend time on training, pay for benefits, and other cost-intensive items. This reduces the overall cost of employment and impacts the manufacturing bottom line in a positive manner.
• A decrease in errors. The experienced 3PL understands the value of reducing mistakes. Vital items like inventory control, assembly, processing returns, and logistics management are improved when an experienced 3PL manages these systems. This can significantly reduce the potential of errors, which not only costs more money to correct – but can negatively impact customer service.

An experienced 3PL can help manufacturers with several support systems – but also help them with every aspect of the logistics network. If you’re a manufacturer, take time to contact a professional 3PL and ask them about the different ways they can help your company grow.