3PL v 3PIMM
Q: What’s the difference?
A: As different as profit and loss.
Having enough experience at trade shows, conventions, and other like events talking to prospects, getting the “confused stare” or “wait…what” look while answering the question “What does your company do?”, only to get back “oh, so are you a 3PL?”. I’ve decided to take a stab at a blog that addresses this question and provide a comparative view of both. Hopefully for some this will provide some clarity, and for others it may identify what they’ve been looking for in a service provider but to date have not found.
Your feedback on the effort will be greatly appreciated. Here goes…
Both provide service as an OUTSOURCED SERVICE PROVIDER
Both are used in conversations when discussing logistics and distribution
(and probably shouldn’t be, which is what led me to write this blog)
Neither, from a core competency standpoint, should overlap in service set.
3PL (Third Party Logistics) provider is typically used in the DIRECT side of business supply chain management moving the “Sellable” product from one location to another
3PL is typically used for business external
3PL is typically used to manage the transportation activities of moving products or equipment from one location to another, and can also include the inventory management of the products or equipment being transported.
3PL typically has nothing to do with Indirect Material or MRO management.
3PIMM (Third Party Indirect Materials Manager) is typically used in the INDIRECT side of business supply management
3PIMM is typically used for business internal
3PIMM is typically used to manage the entirety of the package included in the category “Indirect Spend” or “MRO Spend”. This includes the purchasing activities, inventory management, crib and/or storeroom management, e & o management, warranty & repair management, personnel management, reporting and accountability management related to the MRO+ spend category.
3PIMM is sometimes referred to as an “INTEGRATOR”, or an “MRO CATEGORY MANAGER”, although the term Integrator is sometimes too broad a brush and MRO Category Manager too narrow a brush depending on the service set requirements at each service location.
3PIMM generally has nothing to do with External Transportation or Logistics. However, they are directly involved with internal transportation and logistics as it relates to POU activities and functional operational efficiencies.
The above chart, although not a direct corollary with regard to size or volume of one category to the other provides an opportunity to visually understand where a 3PIMM resides in terms of the service set it provides. Without suggesting that MRO spend is 25% of operational budget you can quickly see that it is the smallest category of the four. However, the colors do represent a typical environment where even efficiently operated facilities can and often do have MRO Spend that is out of control. When you analyze the detail you find a significant loss in revenue and overspending..for a myriad of reason. Now, factor in that the MRO Spend is (for ease of use) 10% of Indirect Spend of $10,000,000-you can quantify the out of control spend at approx. $1,000,000.
I use these figures because experience tells me unfortunately they are pretty much the standard across all industries. Many are far worse off than this, very few are better and even fewer yet are not in the red with the Indirect Material spend category.
The reality is that this category has historically been left to its own devices. A necessary evil if you will where limited attention or focus is paid, and as long as no product runs out prematurely, it’s on the shelf when its needed, everything must be ok.
Sorry to tell you, It’s not.
Throwing away a million a year will not get you the corner office you’re hoping for, nor will it support the company’s efforts to outperform the competition. In fact, if your company hasn’t placed a focus on this category spend you’re likely to wonder why your competitive edge has eroded, or why you feel you’re competitively priced by are not gaining ground to the competition.
It’s the silent killer that slowly eats away at you from the inside out. Some realize it late, some not at all. The successful companies have or are in the process of putting subject matter experts in place to correct and insure they are not secretly losing ground…and PROFIT.
A 3PIMM will identify if you’re bleeding out, and where its coming from. Best of all they can fix it AND provide an ROI environment to the Indirect Spend category.
Contact ValuePoint Material Solutions to discuss how to insure your company isn’t silently eroding profit dollars, and set the course for ROI with the Indirect Material spend category.
All the best-