Hiring Manufacturing Staffing Agencies Versus An Onsite 3PL Services Provider. What is the Right Fit For You?

“What's Holding Manufacturers Back in 2024?", determined that the U.S. manufacturing sector will struggle to fill 3.8 million jobs over the next decade due to high turnover and the number of resignations. Manufacturers face several difficult challenges including the lack of skilled workers, meeting quotas and the requirement to constantly improve operations. Manufacturing staffing agencies and Onsite 3PL Services Providers are two effective solutions that may address the challenge of filling vacancies. An Onsite 3PL service provider manages the recruiting, hiring, training and safety protocols of the facility as well as the day-to-day operational execution once staff in onboarded. Both solutions can improve a manufacturers productivity with skilled labor that is no longer hired in-house. While these options both have similar costs models, staffing agencies may have a slightly cheaper cost per hire. When factoring in costs associated with turnover, training, in-house management, and productivity, the on-site 3PL model delivers the best overall value.

Understanding Manufacturing Onsite 3PL Service Providers in Manufacturing

An onsite 3PL Service Provider provides onsite manufacturing support by managing all internal logistics integrated into client sites. This includes both labor and process ownership, with technology and equipment as an optional service. Service providers can leverage clients’ current investments in technology, equipment and real estate to perform services onsite. Some of the services that are offered include:

Truck driver check-in and check-out
Receiving
Inventory Management
Picking/Packing
Kitting
Line-side delivery
Material handling
Order Fulfillment & Shipping
Additional value-added services

How an Onsite 3PL Service Provider Handles Materials in a Manufacturing Plant

An Onsite 3PL Service provider handles the internal logistics of the manufacturing plant to ensure that all raw material, finished goods, equipment, supplies, and information are in the right place, at the right time. The service provider receives, manages inventory and distributes goods across the manufacturing plant and then prepares and ships the completed goods to customers.

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The Evolution of an Onsite Manufacturing Facilities Services Provider

The role of a service provider has changed as a response to the evolution of the manufacturing industry. A services provider is now a strategic partner in automation, technology Integrations as well as labor optimization. One example of the improvements service providers have provided to their clients includes optimized labor scheduling. This has been made possible with enhanced workflows that optimize labor output and technology that can track performance and create efficiencies. Because a services provider becomes a strategic partner with the client, they share business outcomes to achieve targets of productivity and safety. In addition, they adapt to their client’s culture, business model and provide unique processes that are customized based on business needs.

Key Functions and Responsibilities of Service Providers

Recruiting
Training
Onboarding
Day-to-day operational execution
Onsite management
Metrics management
Process management
Safety and quality
Continuous improvement

What are the Benefits of Manufacturing Onsite 3PL Services Providers?

Cost Efficiency and Budget Management - Service providers can provide transparent pricing that is all inclusive with a full strategic management program.
Accountable for business outcomes ensuring business meets are met.
Access to expertise and technology with recommendations and guidance – A service provider performs Kaizen events to improve the efficiency of operations.
Scalability for different projects large and small – Service providers employ full-time employees and regional floating employees to meet demand volatility.
Enablers of growth and innovation – As a strategic partner, a services provider is there to provide efficiencies to the business to enable enhanced productivity and allow for growth opportunities. Because of a service providers expertise in the industry, they are abreast of new innovations to take the business to new heights.
Employee cross training – Employees receive frequent training in different roles outside of their initial expertise to maximize operational flexibility.
Risk mitigation
Safety protocols – Service providers develop customized safety programs and adhere to strict safety standards.
Career path opportunities – Full-time staff are provided opportunities for career development within their role, leading to higher retention and improved job satisfaction.
Managing to KPI’s with internal resources
Labor efficiencies

Internal Logistics Case Study

What Challenges Do Organizations Face with Manufacturing Onsite 3PL Service Providers?

Vendor Management and Relationship Issues – Service providers are frequently communicating with their clients to report on operational updates, operational performance and a variety of other items. The relationship can break down if communication is not clear and transparent, if the service provider is not meeting deliverables, or if the service provider is not addressing concerns in a timely manner.
Concerns Over Data Security and Compliance – The manufacturers’ processes, data, and more are managed by the service provider as opposed to in-house staff. By outsourcing the logistics to a service provider, the manufacturer becomes dependent on the service providers ability to execute, increasing the importance of timely and effective communication.
Integration with Existing In-House Systems – Customized solutions are difficult to integrate with current business systems, especially if those systems are complex. The service provider needs time to understand the business’ needs to have a successful integration.

How Do Onsite 3PL Service Providers Handle Staffing for Manufacturers

Internally sourced staff – Staff is sourced by the service provider who is responsible for the recruiting, training, preboarding and onboarding of each employee.
Flexible staffing – Service providers can scale up staff based on business needs.
Match talent to business needs – When hiring for the manufacturer, business needs are met with an optimized labor force with appropriate skillsets.
Support – On the first day of the partnership, the services provider creates quick hiring, onboarding and retention strategies to ensure a smooth and quick transition.
Upskilling and cross training - Staff is cross trained to handle other needs within the facility. For example, a receiving employee could also be trained in picking and packing. Additionally, the service provider allocates time for staff to receive additional training in areas specific to the business.
Recruiters with industry expertise – Recruiters have industry expertise and knowledge to hire the appropriate staff for the manufacturer.

What Should You Look for When Choosing a Service Provider?

Evaluating the Range of Services Offered – Understand the full scope of what a service provider offers. Because service providers can take control of certain operations within the business, it should be defined and made clear what the expectations are when they are brought in. A full management strategy plan should be created that defines the workflows, procedures, technology, performance metrics and more.
Assessing Experience and Reputation – Service providers should have a history and a reputation of service excellence for their clients. One way to go beyond an RFP to understand a service providers capabilities, is to reach out to their current clients to see the work they are currently doing for them and how well they are doing it for them.
Importance of Customizable Service Plans – Service providers should be flexible and able to adapt to their customer’s needs. Your business has its own intricate needs, and it is important for the service provider to meet those needs even if it does require customization.
Continuous Improvement Initiatives – Business goals and KPI’s are set at the beginning of the relationship between manufacturer and service provider. However, over time, that partnership will need to continue to evolve as business needs change. A service provider should be a partner driving growth and innovation within the industry.
Clear communication channels – Lines of communication should be established early on between service provider and manufacturer. A manufacturer should have a clear point of contact to reach out to under any circumstance.

Learn about sourcing internal logistics operations

Manufacturing Staffing Agencies: Building a Workforce

A manufacturing staffing agency provides manufacturers with qualified workers to handle all manufacturing needs. An agency can help fill several different roles with full-time employees, contract employees, temporary employees and more depending on business needs. Staffing agencies can control all recruitment processes ensuring that the manufacturing facility is staffed according to the needs of the business. The management of multiple staffing agencies keeps a constant stream of new hires in the pipeline but no relief for internal management responsible for the workforce and operational productivity.

How do staffing agencies understand staffing needs in manufacturing?

Industry knowledge – Staffing agencies have experience understanding the needs of manufacturers and the processes and job roles that are required.
Workforce fluctuations – A company’s needs can fluctuate for several reasons. Manufacturing staffing agencies can meet these needs by providing different types of employees whether they be temporary employees, contracted employees or permanent employees.
Skill evaluation – During the recruitment process, staffing agencies can ensure that the laborer filling the designated role has the proper skill set, certifications and proficiencies with equipment, and understands all safety procedures.
Regional market awareness – Recruiters know the local labor pool including demographics and career paths within the manufacturing industry overall, but not typically a deep understanding of the unique challenges and trends of your specific operation. They are also aware of seasonal fluctuations in manufacturing demand. They understand the local labor laws regarding safety and compliance, the standard compensation package for roles in the area and they build relationships with other manufacturers in nearby areas to grow a talent pool.

What advantages do manufacturing staffing agencies offer?

Quick skilled hiring – Agencies quickly identify and place candidates, reducing time to fill positions when there is turnover or if new operations begin.
Recruitment experience - Agencies pre-screen candidates reducing the chance of hiring unqualified candidates.
Low-cost staffing – Hiring costs are reduced because agencies handle the advertising, screening and interviewing process, saving the manufacturer recruiting resources.
Flexibility – They can hire a variety of staff including contract, temporary and full-time employees allowing the manufacturer to scale up and down based on their needs on a given basis.
Talent network access – Agencies have access to a wide pool of employees in several different specialties and in different geographic regions.

What Challenges Do Organizations Face with Staffing Agencies?

Staffing agencies compete for skilled labor. Skilled laborers who are proficient in specialized processes, understand difficult-to-learn technologies, and can operate specialized machinery are in high demand. Staffing agencies don’t handle the training involved to become skilled at a specialized job role so they need to hire employees who already have the necessary skills to operate within that role.
A staffing agency is not accountable for business outcomes and maintaining the culture within the facility. They hire qualified staff for the manufacturing facility and the manufacturer is responsible for reaching their own goals.
There is a possibility of high turnover rate for staffing agencies requiring frequent replacement and retraining. Staff are also unlikely to feel a sense of long-term commitment because of their temporary status within the organization.
Communication challenges can arise between the manufacturer and the staffing agency. The agency may not comprehend the organizations needs since they are not onsite. There needs to be clear and frequent communication with the agency so they understand business needs.