How Technology Can Be a Differentiator for 3PLS

  • November 01, 2022

Supply chains used to be about physical assets and infrastructure to move boxes. Now supply chains encompass complex information flows, moving data, and capturing intelligence. Intelligence can help supply chains optimize operations and enable rapid decision-making when captured effectively. Today, technology is just as important as the people using it.

Technology serves as a key differentiator in today’s market, especially among 3PLs that can leverage technology as a medium across different service dimensions to increase revenue and elevate business growth. As shippers seek enhanced solutions that go beyond traditional tactical solutions, innovative technologies help 3PLs stand out from their competitors.

Examples of technology as a differentiating factor for 3PLs include:

  • Micro-fulfillment Centers: The rise of e-commerce, shifting consumer preferences, and ongoing labor shortages have necessitated a shift towards micro-fulfillment centers (MFCs). These “warehouses of the future” are often highly automated and operate in a small distribution/warehouse space, usually 10,000 square feet or less. Most MFCs incorporate autonomous mobile robots (AMRs), robotic palletizing, and robotic picking to track real-time inventory through the supply chain until the item is delivered. MFCs are highly efficient and can operate using much less manual labor, helping companies offset labor shortages and rising inflation. Additionally, a well-functioning MFC operates with high accuracy, improving overall performance to increase customer satisfaction.
  • Warehouse Automation: Once seen as a threat to the workforce, many now view automated warehouse solutions as a necessary ally. 3PLs are investing in automated forklifts, robotic arms, sortation equipment, and more automated solutions to differentiate their services. However, not only can warehouse automation result in faster delivery and increased efficiency, but it can also create safer working conditions. By automating repetitive tasks ordinarily performed by workers, warehouses can improve their staff’s schedules, ergonomics, and overall morale, helping to attract and retain existing talent.
  • Technology Enhancements: While IoT, blockchain, and AI continue to be major disruptors in the market, control towers and digital twins offer new capabilities to complement these disruptors. For 3PLs, control towers provide the first step in achieving enhanced visibility and autonomous planning/scheduling. These centralized hubs also produce vital information regarding transportation issues and tracking deliveries, enabling quick decision-making. With machine learning and predictive analytics, control towers can help 3PLs stay better connected and informed while achieving higher resilience and digitization.
  • Digital Twins: Digital twins allow 3PLs to run a near real-time virtual representation of an entire supply chain network. The benefits of supply chain digital twins range from improving food logistics with the help of IoT, smart sensors, and real-time alerts on food quality and inventory control to creating virtual copies of transportation, training, and warehouse space optimization. Like control towers, digital twins enable 3PLs to make rapid decisions with high confidence in the outcomes.
  • Autonomous Vehicles: Advances in autonomous vehicles have piqued the interest of the trucking industry, which has experienced a staffing shortage of more than 80,000 drivers. Autonomous vehicles would not only help offset this labor shortage but also require fewer breaks and stops on routes and pose fewer restrictions for longer trips. Additionally, autonomous vehicles would be more fuel-efficient than traditional vehicles and help alleviate traffic congestion during peak hours. 3PLs can use autonomous vehicles to deliver products and services much more efficiently.
  • Sustainability Improvements: According to the Carbon Disclosure Project (CDP)’s Global Supply Chain Report, the average company’s supply chain accounts for 92% of its greenhouse gas emissions. The supply chain represents a crucial opportunity for improving a corporation’s environmental, social, and governance (ESG) efforts. With connected technology enhancers like blockchains, cognitive capabilities, control towers, and digital twins, companies can increase their sustainable efforts to create environmentally friendly supply chain practices. Companies can use these technologies to track each product through its lifecycle, collect data, and identify opportunities to reduce waste and invest in more environmentally friendly materials.

As the supply chain continues to evolve and grow in complexity, technology represents a key differentiator for 3PLs to gain a competitive advantage. By adopting new and innovative technological solutions, 3PLs can ensure they are growing more efficiently while also meeting their consumers' increasing expectations.

If you want to learn more about how technology can be a differentiator for 3PLs, we invite you to download the 2023 27th Annual Third-Party Logistics Study.

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Ujwala Patil - Senior Manager, NTT DATA Services

Ujwala has always been passionate within the area of Supply Chain and has predominantly worked with major consumer brands in both wholesale and retail divisions along with leading retailers across cross- channels and multiple countries, adding value through productivity improvement and cost reduction. Her areas of expertise include order management, inventory management, distribution, logistics and reverse logistics. She holds an MBA in Supply Chain Management from the Daniels College of Business, University of Denver.

Justin Goddard
Justin Goddard - Manager, NTT DATA Services

As a Consulting Manager in the Consumer Brands, Retail and Distribution Practice, Justin has vast experience in supply chain, logistics and transportation with a core background in the grocery industry. Separately, he has in depth process improvement experience, with a detailed understanding of operations management while applying metrics and KPI performance standards to improve productivity. He holds a Master’s in Industrial Distribution from Texas A&M University.

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