What is a Third-Party Logistics (3PL) provider? A 3PL is a supply chain model that involves three parties:
- Logistics Provider
- Courier or Freight Forwarder
3PL is not just about getting products from point A to point B, it’s a vertically integrated business process that offers multiple services including but not limited to:
- Inventory management
- Freight forwarding
All tangible product at some point needs to be transported to distribution centers, retail locations, warehousing, or end-users. Executing these operations effectively and efficiently requires many different types of resources and capital. Ultimately, it increases overhead costs which can be a financial burden on a business especially those who do not hold supply chain as a core competence. This is why 86% of Fortune 500 companies and 96% of Fortune 100 companies use a 3rd party logistics partner.
Here are some of the main benefits that OEM’s receive from a 3PL’s from the actual manufacturer and assembly partner.
1. Lower Total Cost
These are pretty obvious but ultimately are the most important. Not having to spend money on all the capital assets such as warehouses, trucks, transportation equipment, and other technologies can be a major cost saver but also moving straight from the assembly floor to the desired location is certainly the most time efficient process, which ultimately saves money.
2. Economies of Scale
Established logistic relationships can lead to additional benefits. Opportunities to receive volume discounts, lower overhead costs and timelier service. Along with the experience of shipping and handling similar industry requirements and sizes.
Larger companies may have their own logistic process that they utilize, they can leverage a 3PL partner to deal with times of fluctuations. Just like they might leverage a contract manufacturing partner, what better way then to combine that partner with a 3PL partner.
4. Leverage Latest Technology
The process of logistics management has used technology to evolve and improve on-time scheduling. The use of this technology requires another capital investment that outsourcing logistics partners already have in place. MPE utilizes an ERP and EDI (electronic data interface) systems that both ourselves and the customer themselves can login to monitor inventory levels. These integrated systems provide collaborated operational efficiencies resulting in just in time logistics.
5. Improved Operational Efficiencies
Many OEMs realize significant operational benefits when leveraging their manufacturing partner to include 3PL who essentially manage the entire back end process. Supplier consolidation, lower lead times, reduced inventory carrying costs, improved on-time-deliveries and overall higher customer satisfaction results.
At MPE we offer a Concept to Completion model that links product development to our manufacturing and third-party logistics services. Our flexible business model enables customers to choose any combination of services to fit their unique business strategy and ensure commercial success.
MPE Inc (www.mpe-inc.com) designs and manufactures custom, high-value devices, sub-assemblies and systems for medical and electronics OEMs. MPE’s customers tap into the company’s extensive experience, high-level skills and broad capabilities to accelerate products to market at lower cost.
MPE has a unique vertically integrated business model (ODM – Original Design to Manufacture) to service its growing customer base including: Industrial Design, Project Management, Product Development, Quality Management & Compliance, Supply Chain Management and Logistics. At its core, MPE design and manufactures custom mechanical enclosures and mechanical mobile systems, sub-assemblies and complete system integration platforms, which leverage an in-house engineering team and core expertise in metal fabrication, quality management systems and complex assembly. MPE is a highly technical organization comprised of experts passionate about developing and building products that have the ability to improve people’s lives servicing most of the global Medical device OEMs and many electronics OEMs.
MPE was founded in 1978 and today has over 150 employees. Corporate headquarters and manufacturing operations are based in Milwaukee, Wisconsin. The company is ISO 9001-2008 and ISO 13485 certified with 165,000 square feet of manufacturing foot print.