Third party logistic (3PL) providers' inventory management technology services are moving beyond simple warehouse management to contract warehousing and value-added
There are all sorts of things that 3PLs are willing to do in addition to storing inventory, said Dwight Klappich, vice president at Gartner Research. That includes picking, packing, and light assembly, as well as handling warranty claims, returns and repairs.
3PLs also now support the reverse logistics process, expanding services beyond simply providing outbound supply chain support. "That reverse logistics process is very complex and it's not a mirror image of the supply chain," said Klappich. As manufacturers use 3PLs for more aspects of inventory management, the relationship becomes more "sticky"; with more tasks handled by a 3PL partner, a manufacturer might be less willing to switch to another 3PL.
3PL providers also can offer greater flexibility to manufacturers through inventory management technology services. For example, a business with extreme cyclical variability -- a manufacturer of Christmas lights -- could use 3PL inventory management technology to scale warehouse needs up and down seasonally, Klappich explained.
As manufacturers offload more inventory duties to 3PLs, it's important to know whether the 3PL has the technological capacity to handle the additional services. For example, if an organization decides they want their 3PL to move from importing raw materials to assembling their product entirely, they should ensure the 3PL has the systems and capabilities to do that. In some industries, manufacturers must also consider their particular needs when outsourcing inventory management technology to a 3PL.
In aerospace and defense, pharmaceutical manufacturing companies or other organizations with sensitive products, governance, compliance and risk management can come into play. "Another burden the 3PL must prove is that they can comply with mandates around controlling those products," said Klappich.
About the author: Christine Cignoli is a Boston-based freelance writer who covers IT infrastructures and storage technology. She is a regular contributor to SearchManufacturingERP. Contact her through her website.
This was first published in January 2010