Storing product efficiently, creating value in distribution and shipping product quickly and accurately are a third-party logistics team’s core competencies. In a manufacturing facility developing custom built models or assembling widgets for the holiday season might be your core competency. Think about what you do best and what provides the most value to your business. I’m guessing that efficient storage, distribution or reverse logistics didn’t make the list. The real estate market is tight and space is at a premium right now, making your floor more valuable than ever. Quick market changes can affect demand levels leading to overproduction. Defects and a recall can halt your production if your floor space cannot handle the added inventory.
How can a 3PL help eliminate these areas of waste and provide value to your product stream?
Inventory
Are you utilizing your valuable floor space effectively? Storing and distributing product or doing in-house inventory management is not the best use of your space and energy. Having a third party logistics team manage your inventory offsite can help your team focus on core competencies and become more productive. When your goods are stored with a third party warehouse, floor space is opened up and your people are focused on the actual manufacturing, not the product piling up in the room. We can accurately track shipments, store efficiently in bulk, stacks or racks and decrease your storage costs, which lean up your inventory and product management.
By outsourcing storage and inventory management, a manufacturing plant can also effectively increase floor space and decrease workload without acquiring any more assets! What could you accomplish with an extra 30,000 square feet?
Overproduction
Overproduction usually occurs with large batch sizes, inaccurate demand planning and poorly designed processes. Improved inventory management aids demand planning and decreases the likelihood of overproduction. A flexible-wall storage strategy, where inventory levels can fluctuate and you only pay for the space used, allows for an increase or decrease in your bottom line without a negative impact on your bottom line. Whether you ship to a wholesaler, retailer or direct to consumer, our team can handle advanced logistics services no matter what your inventory levels are.
Defects
The value of a quality 3PL partner increases exponentially if you have a potentially defective product or enter a recall period. Where do you store the product in question? How do you safely monitor your product to ensure that it isn’t contaminated? Who coordinates reverse logistics and shipments to an isolated area?
Off-site storage can alleviate many of the issues during a stressful defect situation; however storage space is not the only problem for many manufacturers. Your production requirements haven’t changed, and now the workload just doubled. Outsourcing logistics to an expert is a must. Mock recalls, point people and accurate inventory tracking & reporting are all in place and available to clients in our warehouses, ensuring that defective products or recalled inventory is handled as smoothly as possible. For food manufacturers, having a detailed recall management plan is part of the Food Safety Modernization Act put forth by the FDA. Accurate shipping reports and inventory tracking allow us to easily find where the questionable product is so that we can get it back into a safe space.
Utilizing a 3PL for your logistics operation also reduces the number of touches in a recall situation. Instead of having multiple sources handling shipments, storage, testing and reporting, our team does it all. In the end, you must decide what is best for the safety of your consumers and your company.
Being lean is all about eliminating areas of waste and making sure that everything you do provides value. From efficient and reliable transportation practices to risk mitigation in a recall situation, finding a quality 3PL partner can provide value to your entire operation. Next week we will discuss how working with a 3PL can effectively give you 100% utilization!