Third-party logistics (3PL) is a fast-paced, challenging industry and it's becoming more competitive every day. The pressure to do more, faster for less money has driven a slew of mergers and acquisitions. The fact is that there are fewer 3PL companies out there today. But even though the number of players is decreasing, clients are still demanding more savings on fulfillment and shipping.
The remaining 3PL companies are being forced to become leaner and develop more robust end-to-end supply chain expertise to survive.
Writing for Forbes, Robert Bowman noted that, in today's cutthroat climate, the line between traditional freight brokers, third-party logistics providers and full-service fulfillment centers is becoming fuzzy.
"Pure brokers are moving up into value-added services, while the biggest companies are venturing into brokerage to supplement their higher-level offerings," he wrote. "At the transactional level, those 'bedroom brokers' that are too small to compete will likely give way to internet-based exchanges that can serve the needs of small shippers. In this historically low-margin industry, the key to survival today is either to broaden one’s service menu or abandon the business altogether."
That's not such a bad thing.
3PL companies are increasingly looking for savings they perceive to be inherent to web-based solutions in order to conserve already-slim margins, and are, in turn, investing heavily in tech that improves efficiency.
So what logistics innovation has fulfillment centers relied heavily on in 2014? Here's a look at two of the most impactful changes.
1. Mobile device-based Proofs of Delivery (PODs).
In the old days, freight brokers and 3PLs had to rely on a paper-based system for Proof of Delivery documentation. Drivers would drop their loads and mail in the confirmation, from recipient sites, of their deliveries. This created many opportunities for inefficiency and waste— papers could get lost, mail could run slow and copy errors could confuse or slow processing of payments. Drivers often waited weeks to be paid for their work.
Moreover, paper documents cost a lot. You need to pay to design, print and reprint them. You have to pay mailing costs. And you need to lease or rent storage space for boxes and boxes of dusty records.
Now, however, app-based POD systems, like Tanztec's VIA, allow drivers to simply take a picture or scan with their smartphone or tablet camera and e-mail an electronic confirmation of delivery. When used in tandem with workflow systems, PODs can even be automatically routed through to the appropriate department within a company, thus eliminating the need for a potentially-bottlenecked central clearing point or backrooms full of old paperwork.
2. Flexible Warehouse Management Systems (WMS) with configuration wizards.
Not too long ago, onboarding a new fulfillment client could take weeks, if not months. A company had to employ a number of data-entry associates to migrate data from the client in the fulfillment center's database. A workflow had to be designed from scratch, or at least customized, for each new partner. And on the back end, a paper-based process for inventory across channels and for invoicing had to be devised and implemented.
The power of web-based software has changed that.
Modern WMS systems now often include configuration wizards that allow easy integration of client information in pre-programmed, but easily-customized, industry templates. Because many businesses within a given industry— say consumer goods— use similar methods of tracking inventory and customer data, a smart WMS is programmed to work within general frameworks to migrate and store data for the fulfillment center.
Investing in and rolling out a smart WMS eliminates the need for armies of data entry specialists (with their inevitable typing errors) pecking away at computers for labor hour after labor hour during an on-boarding process. It frees up labor dollars to employ a more robust picking staff, to spend on leadership development and to offer more competitive wages and benefits (thus enabling a company to realize better employee retention).
The drive for logistics innovation will only continue to strengthen.
The smart players left when the dust settles will be those 3PL firms and fulfillment centers that stay abreast of the changes in tech and that seek to take full advantage of them. By implementing tech-based efficiencies, 3PLs can better develop their abilities to meet clients' demand for full-spectrum supply chain solutions at competitive prices.