How Technology Can Be Used to Overcome 3PL Challenges?
Due to the proliferation of the internet over the past two decades, we are now going through the world’s fourth industrial revolution, aptly called Industry 4.0. Put simply, the difference between the third and fourth industrial revolution is all about the new technologies that were introduced. So, if during the third industrial revolution, we had computers coming on to the scene, today, these computers are interconnected with each other as well as other technologies, allowing them to communicate and make decisions, independent of direct human intervention.
As you can imagine, there is now a high level of automation in supply chain logistics, and digital transformation brings significant benefits. Not only will they save time and money but also provide more seamless operations, overall. Suffice it to say, Industry 4.0 has introduced a series of disruptive technologies that affect pretty much the entirety of the business environment. When it comes to the supply chain and logistics services, we don’t need to look further than how eCommerce omnichannel buying trends have completely turned the industry on its head.
As online sales are at an all-time high and are continuing to expand, brick and mortar retailers need to find new ways to compete. Likewise, they need to pay extra consideration to the customer experience. The speed, accuracy, and quality of on-time deliveries are critical in this regard. But let’s not get ahead of ourselves. Let’s stop to take a look at what the major challenges of 3PL providers are, and how today’s technology can help.
The Biggest Challenges in Logistics and Supply Chain Operations
When it comes to third-party logistics providers (3PLs), there are several top challenges affecting their supply chain logistics management. Based on industry trends, these logistics and supply chain challenges can be summed up into three major categories. These are as follows:
- Last-Mile Delivery – Because of the diverse nature of logistic services, namely LTL freight, truckload, rail, ocean, air, etc., 3PLs typically run into problems with the last-mile delivery process. Imperative to today’s eCommerce and omnichannel supply chains across North America, Latin America, Europe, and the rest of the developed world, last-mile logistics allows shippers to get the goods into the hands of consumers by using a variety of means, including 3PL companies.
That said, the last-mile part of the supply chain, is typically the most inefficient, problematic, and most costly. In fact, the last mile accounts for around 30% of the entire transportation cost. This is generally because a 3PL business will deliver individual packages to low-density areas. This means that the distance between destinations and fulfillment centers are larger, making them less efficient. In more densely-packed areas, inefficiency arises due to frequent traffic congestions.
Also, delivering to residential consumers is typically less efficient. When a recipient is not at home, additional delivery attempts need to be made. Having an obsolete inventory management system can also result in slow productivity. For years, companies have tried to optimize their last-mile delivery service. Today’s technology and the gig economy will provide several solutions to this.
- Customer Satisfaction – Again, due to the current logistics industry trends, customer satisfaction and service plays a crucial role. This applies to both end-users as well as the customers that work directly with third-party logistics companies. For both cases, better supply chain communications and visibility are needed. Many 3PL customers don’t want to deal with the logistics required to bring their products to market. They just want it solved by a reliable logistics partner.
- Supply Chain Visibility – There is a lot of ambiguity when it comes to supply chain management. Many logistics companies claim they can do a lot of things, but in reality, they are struggling. It’s for this reason why more supply chain visibility is needed between the 3PL provider and its customers. This can be achieved via collaborative data, data analytics, artificial intelligence, and other such advanced IT capabilities. All of these will help improve real-time visibility between third-party logistics providers and their customers.
While these are the three major challenges that 3PL organizations have to deal with, there are also others they may need to address. Likewise, these major supply chain and logistics challenges can be broken down into smaller pieces. Nevertheless, today’s technology can be used to provide supply chain solutions that can benefit your business.
How Technology Benefits 3PLs
Flexibility and agility are critical in today’s business environment. This is particularly true for retailers looking to get ahead of the competition. More and more, this involves shipping goods of different shapes, sizes, weights, and packaging. Likewise, there’s the issue of reverse logistics that they also need to consider. As such, eCommerce retailers and other businesses are increasingly relying on third-party logistics providers to fulfill their short-term contracts. With new technologies, however, 3PL providers can solve many of their supply chain management issues and boost their overall core competencies.
Some 3PL companies have been increasing their flexibility by utilizing low capital-intensive robots. These can be easily scaled as the business expands or contracts. Robotic and mobility-driven automation software has allowed many third-party logistics providers to support different sizes and weights, allowing them to move their equipment from one warehouse to another based on real-time inventory and demand.
Modern warehouse management systems (WMS), needed for inventory management, will help improve the real-time visibility of the supply chain. Legacy WMS systems were never designed to handle today’s large order volume of a logistics company needed for its eCommerce fulfillment. Third-party logistic companies, particularly those handling last-mile deliveries, will stand to benefit from a flexible WMS.
These systems’ enhanced functionality will enable these 3PL companies to optimize their supply chain operational processes, inventory management, and freight management, as well as result in saved time, manpower, and resources. Expenses can be better controlled, while resources can be deployed based on need. Various pain-points can be resolved quickly and in real time. As such, costs can be greatly reduced, also helping cement their customer relationships by increasing their level of satisfaction.
3PL providers that automate their business supply chain systems and processes will also experience an increase in their collaboration. This, in turn, will result in faster supplier on-boarding and optimized, on-time delivery. The faster they can integrate new customers and trading partners, the faster they will build their company profile and increase their revenue.
Another area that will greatly benefit from streamlined collaboration is risk management. Not even the most experienced logistics manager can accurately predict sudden changes in weather or natural disasters. Relying on close communication between all parties involved throughout logistics and supply chains not only improves efficiency, but it also helps with better planning in such unforeseen events.
Companies can work together to develop a risk management strategy that allows them to better navigate inclement weather or natural disasters. If the supply chain is kept up-to-date on how to react in these scenarios, the entire supply chain network will be up and running more easily.
Troubleshooting and Compliance
Similarly, a modern management system will increase visibility across all channels. This will provide better monitoring, which enables faster and easier ways to anticipate and resolve various issues that may arise. We can include things like delayed loads, missing status information, etc. Having more accurate insights will facilitate industry and government compliance for numerous activities, including cross-docking, inventory management, warehousing, fulfillment, and packaging.
Better Analytical Insights
Supply chain automation is crucial for providing seamless and complete big data analytics. This real-time information will, however, require deep integration with all supplier portals. 3PL companies that automate their systems will stand a far better chance of forging stable and sustainable relationships with their customers, while allowing them to operate at peak efficiency.
Traditionally, measuring satisfactory eCommerce fulfillment was based on speed. Basically, the faster the product made it to the end-user, the better. Today, however, eCommerce organizations are looking at customization as a means of differentiating themselves from the competition. This implies personalizing the fulfillment experience to boost customer loyalty and satisfaction. And as it happens, much of the responsibility to deliver in this regard falls on 3PLs. They will need to deploy intelligent software systems capable of making fulfillment a differentiating brand experience for their customers.
Last-Mile Logistics and Artificial Intelligence
As third-party logistics providers have to deal with last-mile delivery consistently, they need to realize that artificial intelligence will significantly enhance their transportation management systems. Today’s AI solutions can learn all the inner and outer workings of the 3PL business, providing recommendations in real time. It can also make predictions regarding various business outcomes, facilitating autonomous action.
The field of big data and data intelligence has become instrumental for transportation and logistics, enabling all sorts of predictions based on machine learning and simulation. These predictions in the form of confidence intervals, arrival time windows, or potential shipping delays will be delivered directly to shippers.
With the speed at which supply chain operations and last-mile logistics have increased in recent years, logistics managers need all the help they can get in terms of optimization and recommendations. Data science can handle both these issues. By utilizing sophisticated algorithms, AI solutions are capable of handling the supply chain demand optimization. Due to machine learning, AI is also able to learn over time. This increases its level of knowledge and ability to utilize incoming data for predictions and recommendations.
These AI systems will also record all actions, data, and alerts, handing them over to executives for review. These would analyze the information and decide on what changes may need to be made. These decisions will also be incorporated into the machine learning of the system, allowing it to adapt in the future. This will help improve the response time and enable 3PL providers to get ahead of their competition. Many third-party logistics companies use these types of supply chain technologies to predict the ETA of front-door package delivery and inland location.
RFID systems are comprised of electromagnetically responsive tags and readers. Attaching one such tag on inventory or goods will allow 3PLs to monitor both the placement and movement of their goods. RFID is increasingly useful in warehouse management, truckload shipping, monitoring high-value cargo and individual packages, as it increases visibility all throughout transport and storage. These tags do not require a direct line of sight to be read, as is the case with barcodes. Instead, they have a readability range of around 100 feet.
Autonomous Delivery Services
Much of what makes up the cost of deliveries in North America is labor. In many scenarios, deliveries tend to be limited by the cost and availability of the workplace. In theory, autonomous delivery services could be done around the clock.
- Drones – As many of us expect, delivery drones are not something that is part of the distant future. For instance, Mercedes-Benz and the technology company Matternet have put together a van-based drone delivery concept. The idea is somewhat simple though a bit more complicated to implement. Basically, when the van arrives at a delivery destination, a robotic arm within the cargo section of the van will load the package onto a drone. The drone reads the QR code on the package, so it knows where to go, delivering it to the receiver at around 43 mph and over a distance of up to 12 miles. Loading and all material handling are done autonomously. This technology is currently being tested in Zurich, Switzerland.
- Delivery Robots – Various startup companies have been testing delivery robots as a way of automating the last-mile delivery process. One such company is Starship Technologies. In short, consumers use a mobile app to request a delivery, and an autonomous, six-wheeled bot will be sent out with the goods. These robots can handle about 20 pounds of cargo and travel over a radius of three or four miles at about 4mph. It’s able to maneuver around people and obstacles and can be monitored in real time. For security, the cargo section can only be opened by the recipient upon delivery.
The bottom line is that 3PL companies have a lot to gain from modern technology. It will not only help them lower costs and reduce wasted time, but it will also help with optimizing their day-to-day processes. If you are looking for a 3PL to help with your transportation and supply chain needs, contact Redbird Logistic Services today!