Third-Party Logistics is a massively growing industry worldwide. As per Grand View Research, the global 3PL market size is expected to reach $1.2 trillion by 2025, with a CAGR of 7.5%. Considering the demand for 3PL services, players in the industry are investing in technology-driven logistics software to bolster their tech portfolio. 3PL providers are leveraging disruptive technologies to enhance their distinctive competencies.
Third-Party Logistics is a massively growing industry worldwide. As per Grand View Research, the global 3PL market size is expected to reach $1.2 trillion by 2025, with a CAGR of 7.5%.
Considering the demand for 3PL services, players in the industry are investing in technology-driven logistics management software to bolster their tech portfolio. 3PL providers are leveraging disruptive technologies to enhance their distinctive competencies.
3PL Software Integrations for Futuristic Logistics Companies
Bleeding edge technologies have triggered Industry 4.0, a data-driven approach that thrives on information management and mining it to automate processes and pace up end-to-end business cycles. In this scenario, AI, machine learning, blockchain, IoT that are shaking up the old way of doing trade, are also bound to spill-over into the logistics industry in general and third-party logistics business in specific.
- Artificial Intelligence: AI will trigger a new data-driven approach in logistics management software especially for 3PL companies, known to be characterized by uncertainty and volatility. Combined with machine learning technologies; it will help make strategic decisions driven by actionable intelligence and have a positive impact on efficiency, speed, and service quality. AI, when integrated as a technology in 3PL software, facilitates real-time data exchange for the entire shipment lifecycle. AI-driven tools are augmenting human capabilities in supply chain and logistics by facilitating high-speed data-driven actions. For example, AI technology like natural language processing, can extract mission-critical information from numerous invoices generated by different partners across the supply chain of a 3PL company.
- Robotic Process Automation (RPA):According to McKinsey Global Institute, “transportation-and-warehousing industry has the third-highest automation potential of any sector. Contract logistics and parcel companies particularly stand to benefit.” RPA is fueling the rapid growth of next-gen 3PL companies by augmenting their order-fulfillment capabilities, facilitating shipment scheduling and inventory tracking, route planning, and a multitude of activities. Crete Carrier Corp., a trucking service provider to Walmart, uses 400 robots that run more than 1 million executions yearly to track actions like transit distance, availability of vehicles and drivers, delivery hours, pick-up and drop-off points and choosing delivery slots. Interestingly, only 3 humans are deployed to take care of the entire RPA platform. Similarly, Amazon employs more than 100,000 warehouse robots that have enabled cost saving of 65%.The Port of Rotterdam is an ideal example showcasing how automation has transformed their logistics and warehouse management. The container cranes at the port are unmanned and fully automated to load and unload the ships, thus enhancing human capabilities and reducing operational costs. The technology center of ODW Logistics, a 3PL provider, is equipped with technologies like barcode scanning, manifesting software, static and in-motion scales, box dimensioning equipment, print-and-apply labelers, and sortation capabilities indicative of how automated mechanisms will drive next-gen 3PL firms. Their reliance on automation for warehouse management, product handling, packaging facilities, and transportation systems has been increasing rapidly.
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3PL software integrates Robotic Process Automation at the Port of Rotterdam
3PL companies are getting a clear picture that RPA can efficiently handle repetitive and structured tasks without errors. They will turn towards robotics to improve their competitive position in the industry while serving their customers efficiently.
When we asked Lynn Smith, VP for the Supply Chain & Logistics Management Software business unit at Katalyst Technologies about the advanced technologies that can be integrated into 3PL software to help third-party logistics providers be more efficient in 2020, he explained,
When we asked Steve Foley, CEO at Bulk Memory Cards about the advanced technologies that 3PL providers can bank on in 2020, he stated, “IBM recently launched its Quantum service, which is the one to look out for in the logistics management software space. Logistics is basically the traveling salesman problem, an NP-Hard problem which can be solved through Quantum.
“Some less esoteric technologies integrated in logistics management software are blockchain and loT. Blockchain for ledgers as well as transactions and loT in advanced tracking, such as environmental and other data monitoring are already being used by some leading 3PL companies.”
Moreover, cognitive automation, a combination of AI and RPA, is making business processes intelligent and empowering 3PL companies to make well-informed decisions, thereby creating a positive impact on the ROI. RPA automates tasks by copying massive volumes of data without human efforts, whereas AI extracts insights from the data received from RPA.
Once AI classifies the data, RPA can generate documents like bills, invoices, and execute payments for end-users.
- Blockchain: Blockchain elicits trust and immutability in the link between 3PL providers and their clients. It adds visibility, standardization and innovation to the logistics business model. Blockchain can streamline and digitize activities like fleet management, procurement, freight movement, customs collaboration, trade documentation, and workflows. The client will be benefitted, as costs are optimized and errors are eliminated, while supply chain gets traceable and transparent. Well-known 3PL providers are showing their commitment to invest in blockchain capabilities.
Penske Logistics plans to implement blockchain across its supply chain to increase the traceability of parts, visibility of freight, and bring efficiencies using smart contracts.
Andy Moses, Senior VP of Global Products at Penske, said about how Penske is navigating emerging technology markets and the blockchain project specifically, “When it comes to emerging technologies, we’re not here picking winners or losers. We simply stand for our customers.
Shippers have much to gain from leveraging new technologies, and we are committed to bringing them innovation that drives competitive advantage in their supply chain.
“Blockchain specifically offers a great deal of promise, while recognizing that there are hurdles for this new technology to overcome, before it reaches levels of adoption in day-to-day use by businesses large and small. Our investment in blockchain recognizes our commitment to learning, developing and implementing innovative solutions for Penske customers.”
BiTA, Blockchain in Transport Alliance is a platform where 3PLs, shippers, supply chain management software companies, freight forwarders, and technology infrastructure companies are collaborating and influencing the development of blockchain applications within the transportation industry. Leading 3PL providers like C H Robinson, FedEx Logistics, Uber Freight, J B Hunt, Coyote Logistics, Schneider, GlobalTranz, and many more are members of BiTA, who are working with other industry leaders to introduce blockchain interventions in the coming years successfully.
- Drones: Drones is one of the trending technologies that is expected to revolutionize the 3PL industry in 2020. They can cut delivery time from days to hours, helping companies to fulfill their customers’ expectations related to speedy delivery. According to Yariv Bash, CEO of Flytrex, a drone company, “Flytrex will soon begin its on-demand, unmanned food delivery via commercial drones for residents of Holly Springs, North Carolina. Once up and running, flight time from pick up to drop off is within a few minutes, faster than any alternative.”The latest evolving technology will redefine customer experience in 2020.
- Internet of Things: According to Forbes, the next-gen companies known as Logistics 4.0 will be using the Internet of Things to connect physical items with internet-enabled devices. According to a report focused on the Internet of Things (IoT) jointly released by Cisco and DHL, there will be 50 billion devices connected to the internet by 2020. The report further adds that in the coming period, the logistics industry will achieve higher levels of operational efficiency as IoT connects millions of shipments being moved, tracked, and stowed in real-time.
It’s high time that 3PL providers must raise their game and get ready to embrace the above-mentioned disruptive technologies to become customer centric. It is essential to adopt a planned approach to harness the benefits of digital transformation to the fullest.
Being capable of giving a boost to the company’s competitiveness and earning, disruptive technologies offer value-changing opportunities that 3PL companies should seize to stay ahead of the curve.
Lynn Smith, VP for the Supply Chain & Logistics Management Software business unit at Katalyst Technologies offers tips for incorporating these technologies in their 3PL software for smoother operations,
Steve’s tips to incorporate these technologies in 3PL software thus, “This should be done in your current innovation process with the innovation team, if applicable. If not, spend about ten percent of your energy on this with proving out small use cases with your teams and vendor resources in proof of concept sprints.”
Third-party logistics will continue to evolve in a global marketplace with emerging smart technologies for future success. If you seek to develop a smart and tech-enabled ecosystem to achieve internal and external efficiencies, collaborate with logistics tech experts at Katalyst Technologies.
We catalyze digital transformation, thus enabling enterprises to lead the field in 2020.
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