There’s only one chef that is in charge of purchasing and ordering the ingredients, arranging shipment, receiving and unpacking the meats and vegetables, and managing storeroom inventory, plus the meal preparation.
As for top restaurant chefs, they focus on developing recipes and preparing great-tasting food. Ultimately, the restaurant’s financial success is built on this capability, so the chef is laser focused on food preparation.
That’s not the case with many manufacturers. Instead of focusing their attention on design and production, manufacturers take on many other non-core tasks. By outsourcing non-strategic plant services, it’s possible to increase throughput and greatly improve financial performance.
Plant Services Strategies
Following are four support services that could be outsourced to third party logistics providers (3PLs) in order to improve performance.
Move packaging and raw materials off site. This increases throughput by freeing up space for production that was formerly used for storage. Materials can be delivered just in time from a nearby 3PL’s warehouse.
Have a 3PL purchase packaging materials and consumable parts like nuts, bolts and boxes. These are non-strategic vendors. The 3PL can even take ownership of the parts until they are needed, preserving cash and reducing on-hand inventory.
Start the manufacturing process outside the plant. Why pay a high-cost technician to open boxes, search for parts and throw away trash? These tasks can be done faster and cheaper by a 3PL. The right 3PL partner can also pre-assemble parts and create line-ready kits to increase the productivity of your line and reduce labor costs.
Implement Vendor Managed Inventory (VMI). If raw material inventory sits for weeks prior to consumption, that is crippling to cash flow. Consider working with a 3PL and suppliers to implement a VMI model, where products are paid for only after they ship from the 3PL warehouse. This immediately reduces your inventory and improves cash flow.
The best choice for plant services
If you are considering outside help for plant services work, choose a 3PL that is experienced working with manufacturers to manage inbound logistics. It’s important that the partner understands the dire consequences of a line down situation.
We talk more about outsourced plant services in our paper “Use Logistics Partners to Improve Plant Throughput and Financial Performance.”