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Third-Party Logistics Providers in the Digital Arena.

The third-party logistics (3PL) sector is going through a major growth spurt. This is being fueled by companies looking to subcontract logistics in specialist areas where they have less expertise and the unstoppable rise of e-commerce, which is demanding faster delivery and efficient inventory management. How can blockchain, robotics, DevOps and predictive analytics help firms become data-driven and keep pace with customer expectations?

Third-party logistics (or 3PL) providers, are standing on the brink of breakout growth. The shipper ecosystem is burgeoning with more delivery orders, more inventory to be managed, more deliveries and more services than ever before. The global 3PL market, valued at $728.6B USD back in 2018, is expected to reach $1.5 BILLION by 2025. While 3PL providers want to adapt to this new market opportunity, their existing logistics operations often have a hard time keeping pace with these growing demands.

In this increasingly challenging environment, technology has become an integral part of expanding and maintaining competitive logistics services. The industry giants are capitalizing on this opportunity, with FedEx, DHL and UPS investing in supply chain technology and autonomous delivery services that enable more, faster, and more efficient delivery options for customers.

Today’s 3PLs face various challenges such as end-to-end visibility, inventory accuracy, and high labor cost. Global 3PLs manage global clients however each entity per country or zone (from 3PL) is managed in silo almost independently (different P&L, different systems), this lack of integration among entities impact the end-to-end visibility.

Digital transformation in 3PL is driven by a new generation of cloud, enterprise logistics applications that enable collaboration and optimization, and helps to leverage central logistics information to enhance end-to-end supply chain visibility.

These new logistics applications are tightly integrated with core warehouse, transportation, labor management and asset tracking to enable new process models to improve customer service and fulfillment excellence.

The Digital Opportunities for 3PL

With technology growing exponentially every day, the time to hesitate in the face of innovation has passed. To put it simply, those 3PLs who want to survive need to evolve with the digital age. And fast.

Spanish philosopher George Santayana said, “To know your future, you must know your past.” The application of this adage is broad - it is especially relevant to today’s third-party logistics (3PL) industry.

The Digital Opportunity

What exactly does digital logistics mean for 3PLs?

Stand out with faster, on-demand and shorter planned deliveries – Faster delivery can mean next day or two-day, depending on your current SLAs and local industry standards. But on-demand goes beyond speed and includes other elements that shippers and consignees are looking for, like flexibility around dropoff points, as well as more, shorter, and more accurate delivery windows.

Expand Your Logistical Services – Do you offer deliveries that pass the consignee threshold? Do you offer services or installations with your deliveries? If not, it’s a good time to start. The same goes for improving oversized deliveries, which are growing rapidly as people order more furniture and large appliances online.
Digitized delivery makes it easier to offer multiple service plans across all shippers ranging from basic to premium delivery. For example, logistics providers can monetize white glove or next day delivery, or live tracking, by including it in a premium service package.

Offer branded deliveries, better experiences, and performance insights – Improvements to customer experience go hand in hand with more efficient logistics operations. For example, if deliveries take place in the planned time window, fewer consignees will need to call service centers, asking where their deliveries are.

Many shippers have limited insights into their delivery, and few opportunities for branding third party deliveries. 3PLs which provide a digitized, branded tracking and delivery experience and elements like accurate quotes at checkout will differentiate themselves with both shippers and consignees. If, on top of that, they provide the shipper with delivery and customer data, they will be well positioned in today’s digital logistics marketplace.

A competitive delivery experience should include the following:

✓ Providing shippers and consignees a variety of service packages and convenient delivery options.
✓ Instant quotes for shippers and consignees
✓ Branded consignee notifications when the package or item has arrived or left the final warehouse, and when it reaches its destination.
✓ Real-time delivery updates to shippers and consignees, including live tracking.
✓ Tracking chain of custody and providing visibility to the shipper
✓ Tracking performance data from the warehouse to proof of delivery, in order to identify issues and improve your services.
✓ Contactless delivery options such as photographic proof of delivery
✓ Enabling assembly and installation services on demand – even allowing the consignee to request and pay for them at their door.

Of course, this list doesn’t include the basics of a good customer experience: on-time deliveries, pleasant drivers or technicians, and a consistent experience that consignees and shippers learn to identify with your services.

SWOT - Digital Transformation in 3PL

BENEFITS OF DIGITAL TRANSFORMATION

The key enablers of digital transformation includes cloud technology, internet of things (IoT), automation technology and high quality broadband networks. These enablers facilitates ground for distributive developments in logistics, that helps to manage higher service levels while reducing operating costs.

Enhanced visibility. With extensive use of sensors, GPS, and cloud technologies 3PLs can track their assets and inventory in real time. 3PLs, customers and other supply chain elements are linked by high quality broadband connections, that improves end- to-end supply chain transparency.

Automated logistics operations. Combining traditional technology with artificial intelligence is increasingly giving rise to systems that work autonomously and organize themselves. Automation reduces error rates, improve speed and reduce operating costs. Applications of automated guided vehicles and automated storage/ retrieval systems in high frequent warehouses are examples of automation in 3PL that delivers tremendous benefits.

Greater accessibility for customers. Growing number of 3PLs are using new customer engagement technologies to inform, educate and interact with customers. With application programming interface (API), customers can link 3PLs platform, with their own IT systems. Royal Mail, for example has launched a shipping tracking system, with an API, that enables integration between e-retailers’ IT systems and Royal Mail’s logistics system.

CHALLENGES OF DIGITAL TRANSFORMATION FOR 3PL

Even though various digital technologies are used across supply chains, digital transformation is a new concept to logistics. Changing the DNA of traditional, and less flexible 3PL industry towards digitization is quite challenging.

Lack of support from top management. The decisions of digital transformation is on the table of top level managers. Traditional senior executives of 3PLs are less focused with digitization. If so changing the perception of senior executives to support digital transformation could be a difficult task.

Digitization needs to go beyond 3PLs control. 3PL is usually focusing on logistics execution so digitization may only address the logistics execution layer although the greatest benefits are on digitization of entire supply chain.

Who owns the data? Whether manufactures, or logistics operators or platform providers own the data? Would be a toughest question has to be answered, when 3PL operators move into digital transformation. Sharing data is a crucial factor to realize overall supply chain benefits. But it needs a proper study to mitigate the risks associated with data security.

Futuristic Approach of Digitalization in 3PL

THE FUTURE OF DIGITAL TECHNOLOGIES IN 3PL

The logistic industry is going through a time of rapid and unprecedented transformation. The future of logistics is paved with innovation and technology.

3PL providers will leverage the use of big data analytics in various aspects such as transport network optimization, simulation, and predictive maintenance of fleet. On the other hand Internet of Things (IoT) will facilitates communication between physical elements such as truck, AGV, conveyor system, and drones. In addition to IoT and Big data, software as a service (SAS) facilitates even small and medium size 3PL companies to enjoy the benefits of digital transformation.

Along with the advancement of the technology, there is a risk of tech giants entry into 3PL industry. Amazon, for example evolved from an online bookseller to an Internet service provider to a complex logistical service provider. Already many start-ups are served by Amazon to handle warehousing, inventory management, and fulfillment for them. Without Amazon those activities likely be handled by a 3PL. When the tech giant builds the infrastructure to handle logistics, it would be a definite threat to 3PLs in future.

CONCLUSION :

Digital transformation is not just adopting latest digital technologies, but establishing a Digital Strategy. 3PLs transform digitally, to differentiate themselves in a very competitive market and to fix a broken promise to provide end to end visibility and timely accurate information for customers’ critical decision making process. The secret is to understand the digital game in supply chain, and be the first to occupy strategic checkpoints before others do.

Using 3PL software as logistics solution.. Guidelines.

Whether you take a pen-and-paper approach to managing inventory, dispatching, and routing, or boast a complex in-house management software, your logistics operations will need to quickly advance and adapt in order to capture the additional market share. If the first step is to identify your business needs, then the second is to identify the right technology to address these needs.

Any logistics technology for 3PLs should include the following:

Integration – Technology should function as a middle-man that helps your different operational systems and units to communicate with one another and perform their individual functions as part of a larger, coordinated effort.
Data-Driven Insights – Unifying and standardizing how data is measured across disparate sources (internal and external) in order to accurately understand and optimize your delivery operations cost-effectively.
Automation – Automating the delivery flows speeds up processes and creates the flexibility necessary for offering more premium services.
Delivery Experience – Shippers rely on their logistics providers to help them offer consignees standout experiences: branded deliveries and branded communications; tracked delivery, consignee feedback, shorter delivery windows, and easier returns. Good delivery orchestration software will make it easier to answer these needs and the costs around them.
Dispatcher and Driver Retention – The right 3PL software provides solutions for onboarding, driver data and other tools that increase efficiency and retention rates for drivers and dispatchers.

Doing more, with less......

The relentless focus on customer experience has set a new bar for shippers and delivery providers. Yesterday’s standards for reasonable delivery windows, times and services are no longer enough. Carriers, 3PLs and other providers face an unprecedented challenge, which is also an opportunity: how to take the same levels of flexibility, convenience and speed presented by eCommerce, and translate it into the optimal delivery experience. To compete, providers will need to rethink their technology and adapt their delivery offerings.

Technology Trends That Will Play a Key Role in the Year 2020

Digital Transformation in Logistics: Technology Trends That Will Play a Key Role in the Year 2020

Technology Trends That Will Play a Key Role in The Year 2020

Cloud Logistics :-

The data has shifted to cloud and it is possible to get logistics IT services on-demand or through pay-per-use model. This makes it easy for smaller businesses as they do not have to invest must into creating IT infrastructure and pay for services only when they need it.

For example, Gateway Digital’s system take care of end-to-end logistics processes right from procurement to billing. Most of the supply chain information gets stored on cloud, providing a single overview. Also, as the data processing takes place through cloud, it is easy to access these services. Nearly 50% of logistics owners have adopted cloud logistics and other cloud based services. Another 20% are about to do so.

Big Data and Machine Learning :-

What makes data the most valuable commodity? A lot of reasons. The biggest being, it has the potential to revolutionize business models. In the logistics sector, analyzing and merging data by leveraging AI technology can offer better insights for risk management, demand forecasting and predictive logistics. When data streams containing traffic, weather and shipment information are merged, one can execute real-time route optimization.

Furthermore, big data can transform reactive logistics business models to a predictive one. A model like this, makes use of data received from online vendors to predict sales so that it becomes easier to ship extra orders. It also tracks the shopping habits of customers so that the deliveries can be made smoothly. Such models are used by Amazon to facilitate deliveries on the same day. Remember, nearly 98% third party logistics accept that big data is vital for the success of their organization.

Internet of Things (IoT) :-

When the internet of things is implemented through sensors and connectivity programs, it can connect any object to the internet, providing complete transparency and traceability right from the process of shipping to delivery. Sensors and beacons help in improving customer management and know about the problems that recur at specific route points.

IOT has also been bringing revolution in the logistics industry as one can automate the transportation process and trace the merchandise in the most secure way. Companies like DHL have connected warehouses, so they can tag equipment and individual items providing constant information about their position, operational status etc. making the warehouse processes efficient. IoT connected sensors can monitor humidity and temperature for cargo containing sensitive items like pharmaceuticals and food.

Consumers can avail facilities like IoT push buttons through which they can place an automated order and use smart locks by driving away the issues of unattended home deliveries.

Blockchain :-

Last but not the least, enters blockchain. It can decentralize data by enhancing traceability and transparency and provides users with all the information about a product’s journey. Users can verify if the product they have bought is authentic and is not adulterated or tampered with.

Brands like Walmart make use of blockchain-driven traceability bringing transparency across the entire supply chain. For a lot of logistics companies, Blockchain has simplified intricacies in the system and has led to a 15% increase in global chain along with 5% increase in global GDP.

Coping with Digitization Challenges through Gateway Digital

Companies that have not adopted digital transformation face a lot of challenges due to lack of connectivity. This includes family-run firms as well as global enterprises that have a long delivery chain making it impossible for them to track the delivery process.

Imprint

Publication Date: 10-05-2020

Dedication:
AUTHOR :- Panthiv Joshi panthiv@gmail.com +91 9033077033

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