Redefining the role of 3PLs in Supply Chain

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Redefining the role of 3PLs in Supply Chain

Over the years, 3PL companies in the country and globally have been eyeing for a greater share of pie to drive holistic growth. NOW is the time to reset the pace of growth and bring out their innovative best to win over their prospective and existing clients, writes Sanjay Desai, Consulting Advisor Supply Chain.

The 3PL sector is rapidly changing and evolving into a major collaborative & service enhancing function by adapting to logistics demands of today’s business. At the core of this evolution is a realization by companies of the need to provide a service that adds real value to client’s business. The core services provided by 3PL companies include warehousing, transportation, orders fulfilment and last mile delivery. However, high impact third-party logistics companies are going beyond this traditional role to add extra value to their services aimed at providing a service that far exceeds clients’ expectations. The following 8-point agenda will redefine the role of 3PLs in the supply chain:

Value Addition and Transparency: The current decade (2020-30) is a year of growth and recognition for supply chains globally. At the core of 3PL business, success will be a commitment to value addition. This will involve their ability to communicate effectively with their clients. Today, businesses compete for not only a good product and service, but also on the quality of their customer service, which is vital when building your brand identity. Besides, a 3PL company’s ability to provide a transparent service increases customer loyalty. Some of the value-added services that demonstrate a company’s transparency and increase customers’ confidence in a company include forecasts, free audit reports, freight visibility, a schedule of available services, etc.

Automating Data Analytics: The need for investments in cutting-edge and innovative technologies has never been as critical as it is today. As logistics become more complex, having the relevant technologies can simplify these processes through automation. A 3PL company must invest in innovative technologies that provide insights and promote accountability by availing critical information to attract new business while maintaining current clients. Automation is a critical part of today’s logistics process. Labor-intensive tasks are being replaced by automation, which is fueling production efficiency. A 3PL company that ignores the key role automation plays in the supply chain will simply not survive in the coming years.

Innovative Last Mile Delivery and Track/trace System: The last mile, that is, delivering products to the doorstep of a client, is a key component in the supply chain. While the big boys such as Amazon and UPS are miles ahead of the competition, any 3PL company that does not invest in the last-mile delivery will struggle to survive. Quick, efficient, and reliable delivery of products directly to a customer will be one of the hallmarks of the supply chain sector for many more years to come. Last mile delivery leaves a customer feeling you are directly involved in making sure their products arrive in good shape, and on time.

Mobile Applications on the rise: Most global organizations have a mandate working towards a “paperless” office leaving behind paper records and channel their efforts and focus on agility through mobility. Most high ranked 3PL service providers will opt for mobile technology in their Warehouses/ fulfilment centres given the pressure on them to innovate and create value. Warehouse workers can follow optimized pick paths or put-away paths using their mobile device while drivers transporting goods can receive re-routing information in real time due to traffic or weather. It can also be used to obtain signatures for deliveries.

Environment Protection & Sustainability: Customers today are very environmentally conscious, and the products they buy reflect eco-conscious choices. Millennials constitute the biggest consumer base, and this generation realize that the need to support the environment is important before the world witnesses’ irreversible changes that could impact life on Earth. By finding novel solutions to reduce inefficient processes, the big focus will be on sustainability. Building and equipment will be purchased based on green-friendly cost-reductions in energy use and transportation. To lower overheads, businesses, even some competitors, will combine their transportation of goods to cut overall maintenance and fuel costs. There are examples of (CDN) Competitors Distribution Network being used today in industries like IT/ Medical Devices/ Industrial equipment & Spare parts.

Emergence of 4PL and 5PL in the industry: We will see a strong emergence of 4PL and 5PL in the next couple of years. 4PLs is involved in employing an overseer for managing an entire supply chain of a company. These logistics relationships are often called (LLP) Lead Logistics provider and they are often treated as a consulting company. Whereas, 5PLs is a logistics partner that handles the logistics needs of multiple customers. The management of supply chains is drastically shifting to managing supply networks.

Implementation of Chatbots and Cobots: According to the Logistics Bureau, use of voice-controlled chatbots for interacting with users to perform specific actions at several purchase points including shopping, ordering, picking, and others are expected to trend continuously in the global logistics market. Furthermore, robotics is also set to revolutionize the logistics industry. Amazon already started to engage logistics robots / Cobots for several functions in their warehouses including pick-packaging & storing. Consequently, the rise of Robots-as-a-Service (RaaS) subscription business model will allow retailers, third-party logistics firms, and e-commerce sites to use robots for addressing their fulfilment needs.

Industry will focus on supporting Omni-Channel Retail: Retailers are embracing an omnichannel strategy, which means providing service to customers wherever they are. This means that they will expect their logistics partners to support this model shift. To successfully service omnichannel businesses, 3PLs must be able to synchronize their inventory and warehouse management, outbound logistics, and distribution strategy for all customer’s sales channels.

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