Industry experts believe that a shift toward third-party companies is continuing to rise. This is because retailers and manufacturers need to increase production without increasing their costs also. Outsourcing technology to 3PLs could be the perfect solution. Looking forward, it is important to understand why manufacturers will continue to invest in these offsite practices and how they will continue to rise.
Manufacturers will develop a Need to Process Greater Amounts of Information: The high volume of data generated and the fact that society is increasingly more data-driven is taking control of the industry. With all of the processes involved in analyzing and considering it across SKUs and operations, manufacturers cannot take on these challenges internally, especially if they are relatively new to the industry. As a result of this, companies will have to turn to outsourced agencies to process these higher volumes.
Partnering with 3PL can bring harmony and integration: Inbound and outbound freight programs currently exist to manage product flows and other cycles that take place. We also need to consider systems like billing and TMS. More companies will begin using 3PLs for the technical expertise involved in order to bring struggling systems together in a comprehensive solution. This can also assist with increasing connectivity within the supply chain.
Competition in the Global Market is set to rise: Another major factor in considering outsourcing to a 3PL provider is the ability to gain a competitive advantage in the overall global market. These 3PLs have the benefit of having operated globally for many years with experts in international trade, compliance, and regulations. Outsourcing to them will help more products and international supply chains as business grows.
Eliminating costs with Internal Management Systems: When handling IT needs internally, which includes labor, equipment, and downtime, costs are expected to rise. Working with a 3PL, however, eliminate these costs while maximizing system functions. This partnership will benefit both while lowering costs at the same time.
Savings across entire supply chains: When working with external partners, these partners can leverage data from worldwide supply chains in one set. This can appear counterproductive to competitive advantage, but it results in savings everywhere. Companies can therefore decrease operational and technological costs while continuing to maintain overall goals.
Outsourced Software is more cost effective: Systems operating on the Cloud platforms will likely contribute to be competitive for manufacturers. Nearly 73% of companies are actively using these solutions for manufacturing. Essentially, the trend toward outsourcing these systems will continue and save you money across the board.
Reduction of cybersecurity risks: Cybersecurity is the most overlooked and one of the most important factors to consider. Larger scale 3PLs have the technology and expertise to ensure systems are following all cybersecurity criteria. Just by outsourcing technology, the risks of cybersecurity are reduced within individual companies.
Overall, manufacturers have a huge opportunity to scale their operations by using 3PLs. Small to mid-sized manufacturers that don’t necessarily have the buying power of major competitors will likely be unable to remain competitive without including assistance and technologies offered by 3PLs. In order to stay in business and competitive in this industry, you must be willing to consider outsourcing.