3PL
A THIRD PARTY LOGISTICS SOLUTION BUNDLES PROCUREMENT, TRANSPORTATION AND DISTRIBUTION FUNCTIONS INTO AN INTEGRATED SOLUTION FOR PLANNING, COORDINATING, AND DELIVERING INVENTORY.
Third-party logistics (3PL) providers specialize in maximizing their customers’ supply chain processes. In recent years, 3PLs have innovated their practices to extend the pharmaceutical supply chain for special projects, such as packaging and kitting. Vendor-managed inventory (VMI) are a natural evolution of these extended services. VMI quickly gained a foothold with retail companies, but has failed to catch on as quickly in the life sciences and pharmaceuticals industry.
Vendor Managed Inventory (VMI)
Streamlined inventory management and order fullfillment, better replenrshment and demand planmng with VMI and Kanban bin systems.
Vendor-managed inventory (VMI) is a supply chain management initiative where the distributor is authorized to oversee product inventory. In VMI, the distributor assumes the role of inventory planning for the customer. Instead of the customer reordering when supply is exhausted, the distributor is responsible for monitoring and replenishing the customer’s stock. This approach is meant to optimize supply chain performance, since the distributor can analyze demand and adjust supply in order to maintain the customer’s inventory levels.
Traditionally, 3PL providers implemented VMI solutions downstream in the supply chain. The role of 3PLs was to receive a customer’s product and then manage inventory and distribute from their locations. To do this, the 3PL would incorporate the customer’s business practices, processes and infrastructure to oversee and conduct the distribution.
Now, several 3PLs have started taking VMI upstream into the supply chain by in-sourcing their VMI practices within the four walls of a customer’s operation. This is done by either offering value-added services, such as kitting or holding inventory onsite to be closer the customer’s manufacturing facility. By bringing value-added services to the customer, the 3PL provider saves them the time and costs associated with moving inventory to a second location. Onsite or local storage allows the customer to pull inventory as needed, while only paying for inventory consumed; this reduces the customer’s investment and maximizes cost-efficiency.
