Logistics in the Manufacturing Industry: New report highlights 3PL benefits

The past few years have been quite the rollercoaster for manufacturers. Pandemic-related supply chain disruptions and labor shortages have hit hard, while consumer demand for products has simultaneously skyrocketed. In this article, we’ll look at the latest reports on manufacturing activity, while showing how a third-party logistics (3PL) provider can offer great logistics benefits within the manufacturing industry.

Positive manufacturing signs with some cause for concern

According to a recent article in Logistics Management, manufacturing activity continued to grow in August. The article references the Institute for Supply Management’s (ISM) monthly Manufacturing Report on Business, which showed that the Purchasing Managers’ Index (PMI) was 59.9 in August (values over 50 indicate growth). August was the 15^th consecutive month to show manufacturing growth.

The article and report contain additional positive manufacturing signs, along with some concerning ones. Positive takeaways for August include the following.

• 15 of the 18 manufacturing sectors saw growth in August. The six largest sectors - Computer & Electronic Products; Fabricated Metal Products; Chemical Products; Food, Beverage & Tobacco Products; Transportation Equipment; and Petroleum & Coal Products – had moderate-to-strong growth.
• New orders increased by 1.8%.
• Production increased by 1.6%.

The concerning takeaways are as follows.

• Employment decreased by 3.9%.
• Supplier deliveries slowed for the 66^th consecutive month.
• Backlog of orders was up 3.3%.
• Inventories were up 5.3%.

Turn to a 3PL for logistics capabilities for the manufacturing industry

While August was largely a positive month for the manufacturing industry, there are ongoing issues that manufacturers must contend with. 3PL providers that specialize in manufacturing logistics can help ease the impact of labor shortages, issues with incoming raw material supplies, and space shortages caused by large amounts of inventory tying up space that should be used for manufacturing.

3PL inbound logistics services that can assist manufacturer operations include the following.

Third-party procurement. If your buyers spend a good percentage of their time negotiating with, and procuring goods from makers of boxes, nuts, bolts, and other consumable parts and materials, that time can be better spent on your core business. With third-party parts procurement, your 3PL procures the materials, stores them, manages the inventory, and invoices you only for the parts you need, when you need them.

Kitting services. With kitting services, your 3PL can take the individual parts of a product, compile them together in a “kit,” and then deliver that kit to the production operation for assembly. This saves both time and resources – resources that are hard to come by due to the current labor shortage.

Just in time (JIT) delivery. With “Just in time” (JIT) delivery, raw materials are kept off-site and delivered by your 3PL precisely when they are needed (as determined by demand signals or a pre-determined schedule).

Vendor-managed inventory (VMI). JIT delivery is often part of a larger process in which your 3PL receives and stores supplier inventory at a nearby warehouse(s), manages the inventory, and delivers products to the plant as needed. In VMI arrangements, your suppliers maintain ownership of materials until you need them and contract with a 3PL to store that inventory.

Lean on Kanban for Logistics in the Manufacturing Industry

With over 1 million square feet of warehousing space in Eastern North Carolina, Kanban Logistics has the infrastructure to support manufacturers on the East Coast. We specialize in inbound logistics services for a range of industries, from aerospace to food production and many things in between. To learn how a 3PL with inbound expertise can shoulder some of the load that you find yourself burdened with, contact Kanban today.