Manufacturing Support Services: 3PLs Make a Difference
Learn how businesses advance manufacturing processes by outsourcing services to 3PLs
From COVID-19 to geopolitical issues, modern manufacturing has felt the crunch of global disruptions. Now more than ever, businesses are relying on third-party logistics providers to manage parts of their manufacturing supply chain. By outsourcing some manufacturing activities to 3PLs, manufacturers can become more flexible and scalable.
What are Manufacturing Support Services?
There has been a shortage of supply chain labor across a wide variety of markets. As a result, 3PLs have diversified to meet the labor demand by providing support services to manufacturers, enabling them to cut costs, generate efficiencies, and concentrate on other business processes.
These services support specific parts of a company’s manufacturing process, facilitating streamlined operations and enhanced lead times. Likewise, this has enabled manufacturers more flexibility in their operations, especially when there is peak product demand during holiday seasons. As a result, the speed of today’s consumer-oriented supply chains can create a considerable difference in a manufacturer’s productivity and profitability.
Benefits of Outsourcing Manufacturing Support To a 3PL
There are many moving parts within the manufacturing supply chain. Therefore, any weak link can slow or altogether stop manufacturing and production processes. This can cost a business time and money. That is why the future of manufacturing necessitates that companies constantly work to make sure that the manufacturing side of the supply chain is always operating with maximum efficiency.
One of the greatest advantages to outsourcing to a 3PL are the cost-savings. As a result, many diversified 3PLs can do it all, from hiring and training skilled workers to managing transportation and even billing.
By partnering with a 3PL, manufacturers can focus on scaling their operations to meet customer demand. Third-party logistics providers help do so by reducing the need for a manufacturer to own a warehouse for manufacturing operations, enabling businesses to scale their need for warehouse space based on seasonal demand. In addition, outsourcing warehousing also gives businesses an opportunity to have their products manufactured and stored closer to retailers and consumers.
Subsequently, this can benefit a startup company as well as a major manufacturer. By outsourcing to a 3PL, manufacturers can focus on making sure their products get to shelves rather than worry about logistics functions. 3PLs work to quickly source and secure parts and materials to ensure that customers can order the products that they need. This helps businesses satisfy customers and meet their expectations. Additionally, this also improves customer retention, giving businesses a competitive advantage in a volatile market.
Let’s take a look at some other services that 3PLs offer.
Services that 3PL Providers Offer to Support Manufacturers
Lineside replenishment is the process of delivering the required parts and materials to the proper manufacturing location at the proper time. Any disruptions to this process can result in unplanned downtime on assembly lines, which can affect the remainder of the supply chain.
Modern manufacturing typically utilizes a “just-in-case” manufacturing model. What this means is that any parts or materials needed for manufacturing are kept-on hand “just-in-case” they are needed. However, the just-in-case supply management model can be inefficient, as it requires storage space that could be used for production. It is also costly because parts and materials must be purchased well before they are used. However, 3PLs can implement the just-in-time system in lineside replenishment operations.
The Toyota Production System (TPS) is a type of manufacturing designed to eliminate waste and achieve the best possible efficiency. The just-in-time system is a core concept in TPS.
According to a recent report, 82% of companies have experienced unplanned downtime over the past three years. In some manufacturing facilities, lineside replenishment processes rely on warehouse workers moving carts of parts and materials to and from assembly lines. Therefore, many experts feel that this manual method is inefficient and often results in line stoppages that slow or halt production if parts are delivered late.
Forklifts are also utilized in lineside replenishment, which can not only pose a safety risk but also increase labor costs due to specialized training and pay needed for forklift drivers. In addition, the nature of manual forklifts does not solve the issue of late-arriving materials.
Due to their investment and knowledge of technological implementation, third-party logistics providers can assist manufacturers with lineside replenishment by using autonomous mobile robots (AMRs). AMRs can be used to automatically bring carts or pallets of materials to assembly lines without the need of human workers. If there is an empty cart, the AMR can return that cart to a restocking station for future replenishment. This not only improves the occupational safety and health of warehouse workers, but also eliminates the need to alter a warehouse’s layout. In addition, AMRs reduces the cost of manually storing and handling products within the manufacturing plant.
Sub-Assembly is one of the most important manufacturing techniques for mass production. The production method refers to the assembly of parts into the components that are used to build a manufacturer’s final product. By taking over this part of the assembly process, 3PLs help manufacturers save on space and labor costs.
Here are some benefits to 3PLs taking over the sub-assembly process.
Minimal Training Required
In sub-assembly, the manufacturing process is broken up into smaller steps. This enables workers to focus on a portion of the manufacturing process instead of the entire process from start to finish. As a result, it takes less time to train workers.
More Accurate Assembly
Sub-assembly also improves assembly accuracy. By focusing on assembling a single portion of a product, the worker becomes a specialist in that task. Over a period of time, the worker will gain enough skill in the task to perform it faster with minimal mistakes.
Reduction in Production Time
By taking over sub-assembly, third-party logistics companies can reduce the time it takes to manufacture a finished product. In addition, outsourcing sub-assembly enables businesses to redirect resources to other production needs. As a result, businesses can gain greater manufacturing output.
3PL manufacturing support services enable businesses to be elastic. Elasticity helps companies easily scale production up or down to meet current customer demand, without making changes to personnel or equipment.
3D printing, also known as additive manufacturing, enables businesses to print virtually anything from nearly any material. This is beneficial because it helps to shorten the supply chain process by taking over the role of the supplier. In addition, by outsourcing 3D printing to a 3PL, businesses can save money by scaling inventory at will. This limits the need for on-hand inventory because parts or products can be made when they are needed. Therefore, businesses also reduce their reliance on warehousing and storage space.
Producing stock when needed is also beneficial for shipping operations. Instead of ordering parts and materials from around the world, 3D printers can produce them at any time at any location. This eliminates the time and costs associated with shipping.
Kitting has become more popular as customer expectations for fast delivery and a smooth fulfillment experience have grown. The traditional kitting process involves collecting and organizing separate but related parts into a single package that can be sent to a customer. This process is a quality-focused packaging process that can help to improve customer satisfaction by offering an “unpackaging experience.”
An example of kitting is a computer order. Computers often come with multiple loose parts such as a charger, cables, and mouse. To assemble the computer kit, the individual products are combined into a single package. Once completed, kits can be stored on the manufacturing assembly line or delivered directly to customers.
Subscription boxes are one of the newest forms of kitting. This process has become popular due to the e-commerce boom. Instead of several manufacturers selling products individually, subscription box services kit products into one package to sell. Subscription kitting benefits the manufacturing supply chain because it enables businesses to prepare packages in advance. As a result, kitting reduces shipping times by having orders ready as soon as they are placed.
Advantages of Kitting
- Increased productivity
- Faster delivery times
- Improved inventory control
- Fewer packaging and shipping delays
- Higher efficiency through automation
The concept of sourcing refers to the search for a raw materials supplier to provide the products and services necessary for day-to-day business operations. Finding the right vendor at the right time is a key issue, especially for manufacturers that require elasticity. By taking over this process, 3PLs help meet business objectives in terms of cost, quality, and production deadlines. Moreover, 3PLs can minimize costs as well as lead times of products at each stage of the manufacturing supply chain.
There are several types of sourcing that 3PLs can manage that can give businesses a competitive advantage.
Global sourcing refers to when a business buys its raw materials from other countries around the world. This is essential for global commerce and a healthy global supply chain. So, there are several advantages to global sourcing, including affordability and quality.
Low-Cost Country Sourcing
Low-cost country sourcing refers to the cost-effectiveness of sourcing raw materials from low-cost countries such as India and China.
Prime and Sub Arrangement Sourcing
Prime and sub arrangement sourcing occurs when a company outsources the process to an outside agent, who then sub-contracts the sourcing job to another company.
Captive Service Operations
Captive service operations refer to a group of companies that handle the procurement of products and raw materials for a company
suchPurchase Order Management
Purchase orders occur when a buyer indicates their intent to purchase products, raw materials, or services from a supplier.
Purchase order management (POM) is the process that ensures that purchase orders are properly drafted. Additionally, this process monitors the progress of orders, from placement to fulfillment to delivery. POM typically includes a set of proven standards and practices that ensure the availability of complete, up-to-date information on specific purchase orders. Furthermore, POM is essential to day-to-day manufacturing operations because it involves defining specific actions for each participant in the supply chain.
Traditional ways to manage purchase orders include spreadsheets, emails, and phone calls. These forms of data collection and communication can be ineffective and may even lead to complications within the supply chain.
3PLs use automated digital solutions such as the Internet of Things (IoT) and cloud computing that are customized to meet a business’s specific needs. For instance, smart manufacturing solutions such as these can track the accuracy of delivered products against the original purchase order as well as offer insights into the purchase process over time. By doing so, businesses can source the correct amount of raw materials or products to meet customer needs.
Here are some benefits of using a 3PL for purchase order management.
In the manual purchase order process, time and money can be wasted waiting on approvals and completing follow-ups. Diversified 3PLs that utilize purchasing order software can automatically channel approvals in an efficient manner. They do so by removing the need for emails and phone calls, streamlining the process.
Automated digital solutions enable businesses to have total visibility into the entire POM process, which includes fulfillment and delivery notifications. With automated solutions, each stakeholder involved in the process has the data they need to perform their role. This improves delivery outcomes as well as enhances inventory management.
Artificial intelligence (AI) and cloud technologies instantly collect and database all available orders and supplier information. As a result, AI and cloud technologies enable automatic contract management. This approach to data management can reduce or altogether eliminate manual data entry.
Speedier Order Processing
Third-party logistics providers can make sure that purchase order processing is optimized for speed. With automation, POM approvals are sent to the correct person automatically. When this happens, orders can be approved, filled, and shipped days and even weeks sooner than with manual POM processes.
Other Manufacturing Support Services Offered by 3PLs
Supply Chain Consulting
Many businesses in the manufacturing sector outsource various aspects of their operations to third party logistics providers. With the use of cutting-edge manufacturing technologies, 3PLs utilize their expertise to support different parts of a business’s production system. The manufacturing support services that 3PLs offer enables businesses to not only reduce operational costs but also improve overall efficiency.
Many experts feel that 3PLs will positively impact future manufacturing companies. However, to advance manufacturing processes, technology is vital. Using a third-party logistics provider that implements emerging technologies such as 3D printing and cloud computing can enable greater access to inventory control and real-time information. This can be beneficial to major manufacturing companies that engage in mass production because it can enhance their production method and manufacturing output.
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