Last modified: June 11, 2016
For 10 years the landscape of third party logistics (3PL) has changed in major ways and is poised to grow and modify with emerging ‘smart’ working practices and mobile technologies. Competition is heating up to serve the increasing demand with up to 15 percent growth forecasted. Accurate and efficient 3PL processes geared to decrease costs while providing 24/7 services will be crucial for owners to adopt for future success. The costs-reduction goal of operational and employee hours will be attained by partnering with 3PLs for global supply chain services. Emerging technology adoption will be key to that goal’s success. The following 10 predictions for the next 5 years will become common within the majority of 3PL businesses by whose implementation shippers and supply chain managers will enjoy.
Third party logistics companies will rely heavily on technology to collaborate, connect, and engage with customers. Electronic data exchange will be critical, not only for the performance and integrity of the data, but the flexibility and speed of change. Vendor managed inventory, where the supply chain vendor monitors the buyers inventory and makes periodic resupply decisions, will be common in even the smallest 3PL via web-based portals and access to the systems of the 3PL.
2020 will leave behind paper records to focus around agility through mobility. All third party logistics companies will opt for mobile technology. The RFID enabled devices’ potential to keep and store data for easy transport will simplify tracking and identification of products. Plus, freight shipments ordering and processing will be possible 24/7 by buyers from anywhere.
Smarter software and technology systems investments will be pursued and achieve ROI quickly. Transportation Management Systems type software solutions will lower inefficiency and costs while saving valuable time. Standards will elevate to voice prompting and commands for supply chain processes like inventory inquiries and tracking freight. Improvements in speech recognition software for direct Warehouse Management System communications will help inventory records and order turn-round – not to mention reduce employee-training requirements.
Cloud-based technology adoption will happen in most third party logistics companies. By embracing this new ‘Big Data‘ age, 3PLs will respond to demands by recognizing the need for customer access. With increased transparency, clients can better serve seasonal trends efficiently and meet flexible operation demands. This sharing of information will help item tracking throughout the supply chain.
In 2020, world economy integration and 3PLs will be expected to work on a larger scale with a distinctly global outlook. Global distribution will open markets worldwide with increasingly complex supply chains, cost variations and processes which will give rise to expert 3PL’s. By 2020 many challenges will be faced down to increase growth dramatically, largely due to emerging and expanding global markets on a massive scale. Swift change will occur with mergers within the third party logistics industry along with standardization in shipper and supply chain management expectations.
Another common sight will be the use of continuous replenishment and inventory management. 3PL’s will employ holistic approaches for their supply chains and emphasize external visibility by collaborating with manufacturers on production schedules with suppliers. They will work to ensure raw materials are available and to connect demand to supply within the sale channels.
Data will become more automated and system-generated, flowing out of advanced sensors where inventories will self-count and containers are equipped to report their own contents. Pallets using GPS technology will even self-report delivery errors to achieve in-transit corrections.
Outsourcing to third party logistics providers has seen fierce rivalry between businesses and only those which are able to add value to the services they offer, with differentiators, will survive. Those who succeed will have morphed from commodity distribution services to more complex organizations offering online ordering, returns processing, product assembly and kitting, documentation and inventory management. Integrating customers with a broader range of solutions will become a way for third party logistics providers to form longer lasting partnerships and become more profitable in the future.
A well-rounded transportation management system for worker management improvements will be possible with super user system access and management. Accurate employee efficiency measurements will be contrasted by their KPIs from time per task, chosen carriers, invoice accuracy and handling of freight claims management.
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.
The Future Starts Now
The industry will be shaped by technology in vital ways in the next five years. Companies who are adaptable and quick to adopt these changes brought on by new technology devices and logistics best practices will lead the field in 2020.
What are your predictions for third party logistics services for 2020?
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