The logistics industry has seen enormous innovation and growth in the last couple of years. New entrants and disruptive technologies are popping up seemingly every day that are radically changing the way businesses are conducted.
3PL providers who once derive big chunks of their revenues from B2B clients now rely mostly on B2C companies for income. With the growing consumers’ expectations, these B2C companies are faced with increasing pressure to meet the diverse needs, wants, and preferences of their customers. Armed with mobile technology and social media, consumers have more power than ever, and they expect nothing less than the highest standard of service from businesses.
Today’s consumers expect seamless experiences across channels. Whether it’s via mobile, web, or in-store visits, they want integrated solutions that allow them to communicate, shop, and buy regardless of device or touchpoint. With these high expectations, retailers and e-commerce businesses are putting more pressure on their 3PL partners to help meet the growing needs of this new wave of consumers.
The Role Of 3PLs In Supply Chain
In the supply chain, 3PL is the party that manufacturers, merchants, and retailers rely on to fulfill part or all of their logistics or distribution needs. The advent of online e-commerce and high levels of growth that ensued drove the need for more 3PLs. Over 80% of fortune 500 companies and 90% of fortune 100 companies employ the services of 3PL providers. 3PLs work with manufacturers to deliver finished products to the market. They can also help with retail distribution and returns, making delivery seamless and more efficient.
Challenges Facing 3PL Providers
The last few years have seen a seismic growth in third-party logistics, especially last-mile delivery services. The rapid rise of online sales and consumers’ increasing demand for speedy and immediate delivery have forced companies to look more toward 3PL to better serve today’s consumers.
With the ever-increasing amount of goods that need to be shipped every day, last-mile delivery of packages to customers’ doorsteps is one of the biggest issues facing retailers and 3PL providers.
While the pressure for faster delivery will continue to rise, so too will the opportunities for 3PL firms to grow and expand. The market for 3PL will only keep growing, however, only those who can provide consistent and reliable services will succeed and thrive in this burgeoning industry.
The Impacts of Omni-Channel In 3PL
The logistics industry has been witness to extraordinary events since the dawn of Internet commerce. The proliferation of internet tools such as websites, blogs, forums, and wikis gave rise to more informed and connected consumers. These developments led businesses to start integrating and optimizing customers’ experiences across digital and physical touchpoints, giving rise to the term omni-channel.
Today, a buyer’s journey may begin on one channel and end in another. Whether it starts via mobile, web or physical store, customers may go back and forth between these channels before making a purchase.
Before the digital age, when brick and mortar businesses were dominant, consumers’ were more likely to take and conclude buying action from a single touchpoint, nowadays, however, many tools and channels are involved in shoppers’ buying decisions. For example, studies have shown that many U.S. shoppers conduct product research online then go to the brick-and-mortar store to purchase. Other studies have also found that some consumers like to go to physical stores to touch and feel products before making their purchase online.
Modern shoppers’ journeys cut across channels; they may begin online and end offline, and vice versa, based on the preferences of individual consumers. Today’s consumers want a personalized experience, quick delivery, and availability of product information such as reviews to make informed purchasing decisions — factors that traditional multi-channel methods don’t effectively address.
A traditional multi-channel approach places emphasis on optimizing the preference and experience of the customer in each channel. The channels function separately and often compete with one another, which may lead to differences in customer experience, service, and product information across the channels.
Omni-channel provides businesses with ways to better meet the needs and expectations of modern consumers. With omni-channel, all sales channels are combined into a single, comprehensive channel that contains consumers’ interactions from all touchpoints. This allows companies to deliver not just the products that consumers want, but also personalization and experience that customers demand. Omni-channel has proven to be highly successful and has led many manufacturers, retailers, and 3PLs to reexamine their production, marketing, and distribution strategies. It brings much-needed innovation to supply chain, inventory management, and last-mile delivery.
Omni-channel offers more comprehensive capabilities. Unlike the traditional multi-channel approach, customer experience must be integrated across all channels and moving between channels must be frictionless. If a business notices the preference of a customer browsing in-store, that information is shared immediately with the online channel to optimize the customer experience. Sharing information between channels not only improves customer experience, but it could also impact purchasing decisions.
Logistics and supply chain is fundamental to building an omni-channel strategy. They are critical to efficiently and effectively personalize customer experience and provide the quality that today’s consumers have come to expect. With omni-channel, 3PLs can gain visibility to optimize delivery routes for drivers — reducing time and cost of last-mile delivery. If properly harnessed, omni-channel can be instrumental in meeting the expectations and needs of today’s digital-astute consumers.
The Adoption Of IoT In 3PL
The Internet of Things (IoT) has come a long way since the term was first coined in the late 90s. Today, IoT is impacting lives and businesses all over the world.
IoT is a network of connected things. It’s an innovative technology that allows objects to connect and interact with each other, their environments and with humans via routers or nodes. The technology makes objects smart; therefore a smart home speaker can interact with the homeowner and other smart devices around the house. A smart autonomous vehicle, for example, can detect bad weather or traffic conditions and alert other smart vehicles for route optimization.
So, where does IoT fit in 3PL? One of the most challenging aspects of logistics is visibility. Knowing the state of goods as they transit and when they will arrive has never been more important to today’s consumers. It entails piecing together information from distribution centers, delivery vehicles, and other assets and making that information available in real-time to recipients. Real-time visibility helps 3PL providers streamline shipping operations, optimize delivery routes, and keep customers updated.
To improve visibility in logistics, 3PLs and retailers are turning to IoT technologies to help develop smarter ways to use data to inform business decisions and create seamless customer experiences. Here are a few areas where IoT is currently making an impact:
Location Tracking
Location tracking is important for manufacturers and retailers interested in keeping close tabs on raw materials, inventory, and delivery. Many organizations depend on 3PLs for their logistics needs. By employing technologies such as radio frequency identification (RFID) tags on goods, parties can see the real-time location of goods, fulfillment, and delivery times. Solutions like these can help bring transparency and efficiency to inventory and supply chain management.
If a production facility is big and raw materials are coming in constantly, it can cause a real problem when something important goes missing. When RFID tags are attached to all shipments, it becomes easier to track and monitor an item location.
Sensing
Many products are sensitive to changes in weather conditions. Weather elements such as humidity and temperature must be at certain levels for some products to survive. IoT technologies can be extremely helpful in circumstances like these because just like smart thermostats and other smart devices in most homes, alerts will go off when a set temperature changes. IoT-enabled technologies are not only great for monitoring weather conditions; they can also help in detecting things like vibration, torque, and wind during shipment. Thus, when things go wrong, shippers and recipients can be notified.
Fleet Management
A few decades ago, CB radios and other two ways radios were the primary means of communication between drivers and fleet management operators. And then came the cell phone. But things have gotten more complex and complicated in recent years. Regulations on the environment, health, and drivers’ operations have gotten tougher, not counting other stringent compliance standards that drivers and 3PLs must meet.
With IoT technologies (and cloud-based tools like freight forwarding software), 3PLs can collect and analyze data from their fleets to improve driving behavior and optimize routes — speeding up delivery while also reducing costs for consumers and the environmental impact of transporting goods. IoT is also useful in the upkeep of vehicles. It can aid in preventive maintenance to reduce downtime and prevent the sudden breakdown of vehicles and equipment. And if a breakdown occurs, data from IoT devices can be analyzed to understand why and prevent future occurrence.
There’s no doubt that the future of 3PLs lies in technologies like IoT. It’ll make the supply chain more efficient and when combined with other cutting-edge technologies such as artificial intelligence, big data analytics, and blockchain, retailers, manufacturers, and 3PL providers can gain insight and visibility into all aspects of their businesses and better prepare for the future.
