Emerging Technologies that can Change 3PL Service Offerings

Technology has always been the driving force behind logistics. In the past centuries, people looked for ways to move goods faster, in greater bulk and more economically. The problems were solved primarily by the invention of the railway, automobiles (including trucks), modern ships and airplanes. The invention of the computer, the Internet, and related technologies revolutionized the logistic industry with such technologies as web-based programs like transportation management systems. Now the industry is on the brink of another revolution.

Today’s emerging technologies are more concerned with speed, accuracy, security and seamless delivery. These technologies include 3D printing, drone, driverless vehicle and augmented reality. Here is a brief discussion of how each of these technologies will change the way 3rd party logistics providers work in the future.

3D Printing will shorten the supply chain: It will enable manufacturers to “print” on demand, which will shorten the supply chain by making it unnecessary to have large quantities of finished products stacked in warehouses. 3rd party logistics providers of the future will deliver raw materials instead of many finished products and may even provide 3D printing services at the point of delivery, which will be an additional source of revenue.

Drones will increase the speed of delivery: Drones are small, light, and inexpensive to operate and can go where other modes of transportation cannot. Although 3rd party logistics providers haven’t started using the technology yet, there is little doubt that they will embrace it in the future. 3PL companies will use drones to deliver small packages quickly in both urban and remote areas. Because of their high speed and precision, the use will shorten the supply chain and significantly reduce the costs of transportation. The only things, which are preventing the widespread use of this technology are issues related to government regulations, safety, and size and weight limitations.

Driverless vehicles will cut the costs of transportation: The ability of driverless vehicles to sense the environment and navigate with zero human interventions makes these futuristic cars/trucks ideal for delivering products to customers. A big part of transportation costs is the driver’s salary. 3rd party logistics providers may substantially reduce their overhead by using driverless vehicles for delivery. Another advantage of using driverless vehicles is that they are better drivers than people are, and thus the risk of accidents will be almost zero.

Augmented Reality will improve the handling of goods and speed of delivery: Augmented reality (AR) provides a direct or indirect view of the real world augmented by computer-generated sensory inputs, including sound and video. In the future, employees at 3rd party logistics providers will use AR technology, such as wearable devices, to gain critical information about the freight they are handling, such as contents, weight, and destination. Understandably, such visibility through AR technology will improve the handling of goods, increase the speed of delivery, and reduce overall costs.

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Future of Logistics through STEM Education

The studies of science, technology, engineering and math (STEM) have shaped the logistics industry into what it is today. In recent years, logistics has made momentous strides with the help of new technology. More companies are beginning to invest in logistics to optimise supply chain management and increase customer satisfaction.

The approach of STEM education is to revolutionise learning mathematics and science by incorporating technology and engineering into regular education. This encourages problem-solving and discovery to actively engage a situation in order to find its solution.

STEM

Here are the five ways STEM education has helped shape the future of logistics.

  1. Emerging Technical Studies: In order to improve current logistics processes and eliminate product inefficiencies, STEM education is being pursued with innovation in mind. Having a hands-on approach provide a real-world logistics experience. It gives the opportunity to use technology used by real logistics executives, which includes supercomputers and 3D printing machines, which help solve current roadblocks in the logistics industry.
  2. Increase in Accuracy: The most effective flow of goods, storage and services is a focus that logistics executives plan and implement. Ineffective logistics procedures can cost businesses dearly. Big data analytics, drone delivery and algorithm-based forecasting has helped improve accuracy, and thus, the industry has flourished. With STEM education, accuracy of the supply chain flow has improved.
  3. Robotics & Automated Machinery: Robotics has played a significant role in improving logistics by improving processes and increasing speed and efficiency. This tech can be found today in all aspects like sorting, warehousing and also mail carriers such as drones. Innovative delivery methods are the need of the era as the consumers demand for faster and more efficient product deliveries.
  4. Tracking Technology: STEM education can be considered as the backbone of the logistics industry for supply chain managers. Technologies like barcodes, GPS and radio frequency identification (RFID) tags are all a by-product of STEM education, which are critical in controlling and eliminating recalls and returns. Tracking technology has been exceptionally important for e-commerce business as well, like Amazon highlights fast and accurate delivery of goods and services.
  5. Cross-Disciplinary Curriculum: The study of logistics requires learning a variety of both STEM and non-STEM subjects. A logistics executive is typically responsible for a variety of business functions such as preparing budgets, managing inventory and tracking goods in the supply chain. The non-STEM education consists of managerial courses such as supply management communications and purchasing materials management. On the other hand, STEM education helps in working in senior level positions such as Chief Logistics Officer and take charge of the industry outlook.

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Six Areas to Focus on to Reduce Logistics Cost

As per the global standards, the cost of logistics should be 8-9% of the cost of product. Unfortunately, in India, it is nearly 1.5 times that of the global standard, hovering around at 13-14%. That’s why most logistics companies’ big task is to answer the question ‘How should we reduce our logistics cost?’

Before jumping into answering it, one must acknowledge that the essential ingredient to logistics cost reduction is ‘Treat people well and profits will follow’. One must listen to its people, they do have great ideas.

Now, let’s take a look at all the things one should focus at –

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  1. Safety: First and foremost, shippers and logistics providers should understand the safety considerations like ensuring safe warehouse operations and avoiding injuries. They must really be proactive with safety. They should have someone like a Safety Manager who can be accountable and responsible for safety and ongoing safety training.
  2. Labour Cost: Every project should focus on reducing labour costs. Various measures can be implemented for this purpose like adopting Labour Management Software systems, incentive programs for warehouse employees, and warehouse mobility. This will help in reducing overhead costs and will increase individual productivity.
  3. Preventive Maintenance: In cases such as equipment breakdowns and accidents, one would lose man hours, and maybe customers as well. It is important to note that preventive measures must be taken along with keeping a contingency plan.
  4. Use of Systems & Technology: An excellent Warehouse Management System (WMS) can help reduce costs. Other similar things like product slotting (having top demand SKUs near shipping), robotics, Transportation Management System (TMS), Warehouse Execution & Control System among others can aid in logistics cost reduction through automated, cost-effective transportation and warehousing.
  5. Suppliers: The best tip is to collaborate and partner with suppliers. They can help with working and creating a win-win cost reduction program. Although, keep in mind that never jeopardise quality whole reducing the costs of components.
  6. Customers: The happier the customers are, the lower can be the cost of logistics. By going beyond customers’ expectation, companies can spread the burden of logistics cost reduction over a greater number of orders/customers. That’s why customer service should be factored primarily.

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How to Select & Manage a Logistics Company?

The Holy Trinity of Manufacturing (having the right product, at the right time, and at the right price) is a need for all which is only growing. It is important to understand that collaboration with logistics companies, and even third-party logistics companies, can help in achieving this Holy Trinity. The reason for outsourcing certain processes like transportation management, fulfilment among others to logistics companies is evident and clear. Logistics companies help manufacturers and shippers improve customer service and satisfaction, reduce risk, enable rapid growth, and reduce current and future costs.

select and manage

The way to making an effective selection rests in understanding what the 3PL brings to the table and how it will be advantageous for the organisation. That’s why shippers need to know how to choose a 3PL company to partner with.

1.       Carry an Internal Assessment: An organisation needs to figure out its own needs and current resource deficiencies. It must review what is currently happening before trying to select a 3PL company. Also, it must be certain of its measured factors that reflect actual processes within the existing structure.

2.       Plan the 3PL Selection Criteria: Since some organisations may not necessarily specialise in outsourcing services through 3PL companies, they can opt to hire a consultant with the selection process.

3.       Narrow Down the Selection: Statistically speaking, a 3PL only has a 20% chance of securing the contract. That’s why they do not provide as much information as possible. Thus, a smaller pool of potential 3PLs will give them a better chance which in turn, will allow organisations to fetch more information.

Once a list of likely 3PLs is made, the next question is what requests are to be made to select one among others. Each request helps in understanding what type of relationship will exist between the organisation and the 3PL. An organisation can make a request for a quotation, proposal, proposed solutions or partnership. Bear in mind that besides the request for quotation, all other requests reflect a healthy and long-term solution with mutual benefits.

Now that the organisation would have found one to partner with, the other aspect of working in alliance with harmony is to know how to manage a 3PL, which it is actually quite simple. It revolves around contracts, performance measurement and management, and governance. The contract sets the standard, whereas performance measurement and management through a detailed set of Key Performance Indicators (KPIs) help in understanding the obligations or improvements met. Governance refers to how well the shipper and the 3PL interact. The best solution to this is to encourage a continuously improving environment and strengthen the bond between the parties.

The demand for a faster, more effective, better, more visible, disciplined, and cost-effective solutions will continue to grow. Certain decisions carry a greater risk or opportunity for organisations that are currently considering outsourcing certain processes to third-party logistics companies. But with the help of the above steps, your organisation can make the right decision.

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Three Ways Consumers Are Transforming Supply Chain

On a day-to-day basis, the industry of supply chain is being transformed by socio-economic growth and the behaviour of consumers. The logistics behind supply chain management is also adapting to these transformations like rapid advancements in technology. More than ever, transparency is now important to the consumer. Instant information and demand requirements have become a culture in the logistics industry, thanks to online shopping. Around these changes lies the consumer right at the heart, who is shaping the future of supply chain industry through modern technology and social media channels.

logistic-flat-banner-set-chain-shipping-freight-service-supply-delivery-isolated-vector-illustration-46486133Multiple platforms for making a purchase are available to consumers today. This means one could purchase groceries in-store, over a call, online from the laptop or via an application on a tablet. Shopping across multiple platforms present a number of challenges for supply chain professionals, the most notable being efficient monitoring of stock as it travels from the warehouse to the store, onward to the customer and back again. Nowadays, it is common to find a tablet within a retail store that facilitates online orders and store transfers as part of the in-store experience. Here, the professionals must be able to accurately track larger quantities of goods as they travel further and faster than ever, reflecting a change in agility and speed for the supply chain industry.

Online shopping is increasing the pressure on the supply chain to continue with achieving high standards. Exclusive online retailers have helped establish a new type of consumer changing the industry. A modern shopper expects an experience that is quick and hassle-free from their virtual basket to their doorstep. In order to maintain efficiency and consumer trust, it is up to supply chain professionals to deliver and monitor this. A modern shopper also expects that goods will be delivered quickly, safely and at the lowest possible cost, if not for free. This expectation of instant demand and satisfaction is born of a consumer who knows about the market and the products. Thus, one error could cost businesses multiple customers for life.

Social media channels have a major implication for the supply chain as it increases transparency and connectivity of the industry worldwide. One cannot leave room for error as millions of people are connecting online and the different media platforms can make or break your business. With social media, supply chain professionals have a unique opportunity to access real-time feedback. Consumers utilise social media channels to connect with brands, who in turn produce content to reflect transparency. This transparent system enables companies to accurately predict and gain insight into consumer trends. And as social media continues to grow and change our day-to-day industry, so too does the opportunity for supply chain innovation.

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Does Outsourcing Logistics make sense for Everyone?

Everybody understands the benefits of outsourcing logistics processes to a third-party logistics provider (3PL). It is becoming increasingly difficult for business organisations to control all their warehousing, transportation and administrative tasks that come with shipping and managing inventory. That’s why they are turning to 3PLs that help them with cost reductions and overall management of supply chain. However, they must be careful to ensure they do not overstep their bounds before/during/after selecting a 3PL.

Before we go forward to answer the question ‘Why?’ we must understand what services one needs to outsource. It includes inventory management, auditing services, package processing, labelling , tracking, and order & payment processing.logistics outsourcing

Once you have made the decision to outsource, you should look to a 3PL as a new employee and not just a service provider. That’s why you need to consider four key points of 3PL practices before making a final decision.

1.       3PLs aren’t designed for short-term benefits: Even the best 3PLs in the world cannot help an organisation which is financially bankrupt or does not have any customers. There is no guarantee that outsourcing will be successful, but it will definitely not be successful if one is looking for short-term gains. One needs to understand that the benefits of a 3PL are seen in the long-term. One may not save money in the first few weeks, or maybe months, but the savings will start to roll in later.

2.       3PLs want a mutual beneficial business strategy: One must understand that outsourcing is not a business strategy, it is only a small portion of a business strategy. The key to making this work is aligning the business strategy with the long-term strategy of the 3PL.

3.       There are many different types of 3PL services: They come in all shapes and sizes. All 3PLs must be given an equal opportunity to work with the company. One must look at the whole picture, and select a 3PL that goes beyond what a company actually needs. In addition, partnering with a 3PL offering one-stop solutions is a bonus. Simply put, one should be able to complete all outsourcing requirements with one 3PL that can connect with others if needed.

4.       3PLs are fruitless without collaboration: A 3PL can provide a company with plenty of metrics, but the company needs to let the 3PL know the problem if the employees are not happy with a specific process. Therefore, the company is more important part of the supply chain’s chain of command. As a result, the company should collaborate on both sides of the bridge (employees and 3PLs) to ensure that everybody gains out of their business relationship.

Outsourcing is a great opportunity for a company, however not all of them are ready for the expansion and capability granted by outsourcing. But a company should prepare itself for outsourcing by understanding where it stands and stays realistic in its expectations when outsourcing logistics.

How can Logistics Industry exploit Social Media?

Social media is often quickly thought of as something we use to keep up with family and friends. But, is there business value in applying social media to logistics and supply chain management? Let’s get to know about it.

In the world of logistics, social media is like a mechanism for discovering and communicating with people one would like to interact with – texting and other forms of messaging are part of that. But a more primary benefit of social media is that it gives others permission to communicate with you.

Basically, in a logistics context, let’s imagine that you, the warehouse manager, have discovered that it you aren’t going to be able to fulfil an order to the company’s most important customer on time. Here, having a private social media group can help resolve, where the Vice President of supply chain, the account manager of the customer, the customer’s purchasing manager as well as the logistics director can be pulled into a social media platform to discuss the issue, resolve it and track the root of the problem. To put it in the light, risk management is what can be done by utilising social media.

Demand forecasting is another great advantage that can be taken into account. For marketing purposes, many leading companies in the FMCG sector are monitoring social media, from which the logistics industry can also utilise.

social media logistics

Although, the question should be ‘How can social media help in quantifying the business value?’ To answer this, one must understand that there are two contradicting philosophies to it.

First: Trying to measure the direct ROI of something as otherworldly as social media is the wrong approach altogether. One can track usage, adoption, how people are using the system, and what their connections are. But one cannot create direct correlations between usage and business numbers that are needed for ROI. Simply put, going and spending money on ROI would be honestly just a waste of money because the true value of using social media is your people are coming back to you.

Second: It involves using SMART method, which is having specific, measureable, achievable, realistic, and timed goals relatable to social media and social networking.

To sum it up, we can put it in an apt phrase:

Social networking is not really about socialising, but about facilitating people-to-people communication and collaboration, and social media can (should) play a major role in logistics and supply chain management.

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