5 Modern Advancements Revolutionizing Third-Party Logistics
Supply chains and logistics have seen seismic shifts forward in recent years. In 2020 alone, companies fast-tracked the digital transformation of their internal operations — and their customer and supply chain interactions — by three years to four years. The digitization of third-party logistics (3PL) providers began in the mid-90s, but the pandemic fueled progress that, coupled with advancements in technology, has made way for the next era: optimization.
As companies industrywide turn to technology to streamline the global movement of goods, these five advancements are revolutionizing the next phase of 3PL progress.
No. 1: Data
Data is at the root of industry advancements driving efficient processes that result in time and cost savings for 3PL providers, merchants and consumers. Basically, data is optimizing every facet of the industry.
Take warehousing for example. Data enables 3PLs to have the right product, in the correct warehouse, in a specific and efficient location to optimize pick tickets and reduce worker footsteps to get orders out for faster delivery. Leveraging internal and third-party data, 3PLs are revamping operations, resulting in greater efficiency, visibility and transparency from warehousing all the way through last-mile delivery.
No. 2: Technology Platforms
As 3PLs evolve to operate more efficiently in this technology-driven landscape, they're turning to data-backed platforms that deliver streamlined processes and improved communication throughout the life of an order. These three platforms are partly driving this evolution:
- Order Management System (OMS): An OMS is typically connected to a retailer’s frontend (e.g., website, point-of-sale) and helps manage every step of an order’s lifecycle, from order creation through delivery and returns. It also allow companies to accept and route orders, effectively organizing and automating parts of the purchasing and fulfillment processes.
- Warehouse Management System (WMS): A WMS streamlines the complexities of warehousing and manages the entire fulfillment process. It automates the lifecycle of inventory, from the time an order is received to when it’s shipped, and enables providers to run smarter, more efficient warehouses that are better equipped to overcome supply chain challenges.
- Transportation Management System (TMS): This tool manages every aspect of a 3PL’s logistics and transportation operations, providing visibility into day-to-day operations and overall network performance. From one platform, providers can plan and forecast product movement, optimize routes, manage fleets, track shipments, generate billing, among other operations.
These often-overlapping systems enable 3PLs to optimize their supply chain performance against the challenging backdrop of increased demand, rising shipping rates and heightened consumer expectations.
No. 3: Robotics
As 3PLs tap into technology to enhance productivity across their operations, automation is taking hold. The use of robotics, for example, are no longer exclusive to large-scale warehouse and fulfillment centers. Micro-fulfillment centers and smaller warehousing footprints mean small and midsized 3PLs are modernizing operations by employing robotics to automate packaging, follow up on communication processes, and eliminate manual tasks like picking and sorting. In turn, they're seeing reduced worker risks and enhanced warehouse safety, increased delivery speeds, and improved customer satisfaction.
Moreover, the rise in robots as a service (RaaS) has led to 3PLs procuring the flexibility, scalability and benefits of robotics and automatization, but without the prohibitive cost of entry, upkeep and associated risks.
No. 4: AI and Machine Learning
Artificial intelligence (AI) and machine learning are modernizing 3PL solutions for warehousing, inventory and consumer demand problems beyond what can be accomplished on human intelligence alone.
In the 3PL space, AI and machine learning applications are seemingly endless — everything from data organization and analytics to demand forecasting, routing, inventory, warehouse management and order tracking are being enhanced. As AI systems grow more intuitive and machine learning capabilities improve, 3PLs will continue to see optimized experiences for workers and customers throughout the supply chain in the form of strengthened workforces, greater transparency, better communication and increased efficiency.
No. 5: Electric Vehicles
While most companies have adopted some sustainability initiatives and goals, they may not have considered how to extend their eco-conscious vision throughout their entire operation. Enter electric vehicles, which are the future in automotive and logistics, especially when it comes to last-mile deliveries.
As consumer shopping trends drive a surge in delivery traffic and emissions, logistics providers are moving to support their retailers’ green initiatives by utilizing clean energy, electric vehicles (i.e., all-electric semi trucks, box trucks and delivery vans) that eliminate carbon emissions.
The driving factor for innovation in supply chain and logistics is delivering goods in smart, efficient ways. Technology is central to fulfilling this mission. The future of the industry — and keeping retailers happy — calls for embracing technology and optimizing every phase of an order’s lifecycle.