3PM: 3PL Meets Manufacturing
How to Maximize Your Core Functions
What is 3PM?
3PM stands for Third Party Manufacturing. 3PM helps manufacturers and distributors by absorbing the labor, management, and output of particular functions or steps in the process of manufacturing their product. When our clients adopt this model, they see improvements in cost and efficiency. Outsourcing, inherently, creates a sense of a loss of control. Conversely, 3PM should be seen as an extension of your operations. It is a tool to help achieve the same targets but at a lower cost.
What is an example of 3PM?
If you look at your operations from inbound materials to outbound product, you will likely be able to identify areas that cost you labor dollars that do not directly impact the quality of your finished product. The simplest example is material handling. The logistics of moving your product from point to point throughout your process adds no value to the final product. Yet some manufacturers have seasoned, tenured managers overseeing this function, and tenured associates executing, that are at a much higher cost per hour than an experienced HTI material handler would cost. That same manager might have responsibilities at multiple locations throughout the site and be required to report out on efficiency, output and cost in all of those areas. By utilizing 3PM with HTI, they are able to focus on the core areas that do directly impact their product.
Will it work for me?
It depends. We have evaluated some sites and not been able to identify areas where the utilization of 3PM would make sense for the client for various reasons. On the other hand, with other clients, we have identified multiple areas where the model will work, but they are uncomfortable with the outsourcing of any function. All we, and our engineering team, can do is evaluate each situation and present the options. It’s not a hard sell, it is fact finding. How a client uses the data is up to them.
Below are three different examples of how HTI manages cells within our manufacturing partners’ operations.:
HTI provides the labor and management for a specific project in your facility that is typically short term. This can range from projects related to manufacturing, logistics, or quality. This allows you to maintain production without diverting your workforce.
In addition to providing labor, HTI manages all non-core posts within your facility and the associated output and KPIs. This empowers you to efficiently increase cost savings in non-core areas and protect full time employees in the event of a downturn.
HTI provides the labor and management for our client’s offsite warehouse. Instead of billing by labor hour, HTI bills by pallet shipped. HTI associates perform all warehousing functions like cycle counting, shipping, receiving, material handling, shuttle runs, and dunnage management. Meaning you can accurately forecast your warehouse costs, and place the burden on HTI to efficiently manage the productivity of the warehouse.
With our 3PM model, you focus on what makes you the best, and we’ll take care of the in-between.