Outsourcing Technology to 3PLs: 9 Reasons Why Manufacturers Will Continue to Invest
Automation sales declined throughout 2016, but industry experts believe a major shift toward third-party companies is coming, reports Patrick Burnson of Supply Chain Management Review Manufacturers need to increase production without increasing overhead costs, and outsourcing technology to 3Pls is the perfect solution. The age of internal IT departments is drawing to a close, and the role of outsourced technologies will have a lasting impact in coming years In fact, more off-site IT investments into such companies will become a standard practice throughout 2017, and you need to know why.
1. Manufacturers Need to Process Higher Volumes of Information.
The volume of data generated by the Internet of Things (IoT) and an increasingly data-driven society is difficult to imagine, explains Manufacturing Business Technology magazine. Now, consider that volume of data, analyzing it and leveraging it across millions of SKUs and operations in manufacturing. Manufacturers cannot realistically take on the challenges of Big Data internally, especially among new and upcoming business. As a result, more companies will turn to outsourced agencies, like Cerasis, to process higher volumes of data.
2. Outsourcing Technology to 3PLs Enables Competition in the Global Market.
Another factor in the 3PL Revolution is gaining a competitive advantage in the global market. 3PLs have the benefit of having operated globally for years, and many are experts in international trade laws, compliance, and regulations. Therefore, outsourcing technology to 3PLs relating to the import and export of goods will help move products along with international supply chains and grow businesses.
3. Disparate Systems Require a Partnering 3PL That Can Bring Harmony and Integration to All.
Throughout history, companies have created numerous systems to manage product flows and lifecycles. Inbound and outbound freight programs exist. Billing is another major system, and let us not forget transportation management systems (TMSs). Although 3PLs can handle many of these operations, more companies will begin using 3PLs to have the technical expertise needed to bring disparate systems together in one, comprehensive solution. Increasing supply chain connectivity is cited by up to 67 percent of manufacturers, reports Forbes magazine.
4. Outsourced Software-as-a-Service via 3PLs Will Stay Competitive, More Cost-Effective Than Traditional Systems.
Cloud-based systems, operating through software-as-a-service (SaaS) platforms will contribute to be competitive for manufacturers in 2017. In fact, up to 73 percent of companies are actively using cloud-based solutions for manufacturing, reflecting a 7-percent increase from 2015. In other words, the trend toward outsourcing systems to third parties will continue.
5. Partnering IT Engineers and Technicians in 3PLs Eliminate Costs Associated With Internal Systems Management.
There are costs associated with handling IT needs internally, including labor, equipment and downtime costs. However, working with a 3PL eliminates these costs while maximizing the uptime of your systems. Essentially, the partnership benefits both entities while driving costs down.
6. Consolidation Is Driving Companies to Downsize Operations Where Necessary.
More manufacturers are also looking for ways to consolidate operations. For some already involved with minimal 3PL-based services, the natural progression leads to consolidating IT services under one outsourced provider.
7. External Management Opens Doors to Savings Across Whole Supply Chains, Not Just Select Companies.
When manufacturers work with external partners, such partners can leverage data from worldwide supply chains in one dataset. While this may appear counterproductive to competitive advantage, it results in savings across the board. As a result, all companies can decrease operational and technological costs while maintaining proprietary goals.
8. Use of Mobile Technology on the Plant Floor Demands Apps and Advanced Systems, Which 3PLs Provide.
The rise of mobile technology has changed how manufacturers operate on a fundamental level. Workers now have numerous handheld devices that can be leveraged to improve inventory management and grow the company. However, existing systems were not designed for mobile optimization, so outsourcing this need to 3PLs gives all employees the ability to access relevant systems from their own mobile devices, cutting the costs associated with investing in company-owned devices.
9. Cloud-Based Solutions Reduce Cybersecurity Risks and Costs.
Of course, any discussion on outsourcing technology to 3PLs is incomplete without mentioning cybersecurity. Large-scale 3PLs have the technology and expertise needed to ensure systems adhere to stringent cybersecurity criteria, explains the Cincinnati Business Courier. In addition, the outsourced nature reduces the cybersecurity risks within individual companies.
The Big Picture.
Manufacturers have an opportunity to rapidly scale their operations by using 3PLs. As 2017 moves forward, the rate of outsourcing and partnering with these companies will increase dramatically. More importantly, small to mid-sized manufacturers that lack the buying power of major competitors will be unable to remain competitive without the assistance and technologies offered by 3PLs. Clearly, your business needs 3PLs if you want to stay in business.