Third Party Logistics (3PL) in the modern arena is only possible when you have the right information and data available in a form you can use. This is only possible through the implementation of the right information technology. The Third Party Logistics Study 2018 which was recently released demonstrates that collaboration continues between 3PL providers and shippers. We’re going in the right direction. We’re using data to our advantage for good decision-making and supply chain management. This is all thanks to the use of IT.
The report goes into more detail, specifically about an interesting workshop which took place at Google’s PartnerPlex venue in California. The purpose was to engage discussion with players in the industry regarding shipper and 3PL relationships. There were various contributors including Penn State University, Korn Ferry, Penske, and Infosys.
The Type of Information Technology
Information Technology is, of course, a broad term. The report highlights that the most frequently favoured technologies are those that are transaction-based. For example, warehouse management applications, transport planning, and data sharing. The report also lists IT such as barcoding, supply chain planning software, web portals, network modelling and optimisation, and global trade management applications. Areas which were highlighted as being high on the agenda for the future include cloud-based systems, advanced analytics and distributed order management.
Over the time that this report has been being published, the study has looked at two key analytics: the number, or percentage, of shippers giving weight to IT capabilities as part of 3PL, and the number, or percentage, of shippers who are satisfied with 3PL IT capabilities. The report then also looks at the difference between these – known as the ‘IT Gap’. Typically, over the years, there has been a large IT Gap. However, the 2018 report has seen a massive jump in the second analytic – up to 56% from 27% in 2002. Nonetheless, this is still a slight dip from last year.
Planning and Execution
Visibility is crucial and an important requirement in available technology. Visibility allows accurate and timely strategic decisions both in planning and in mitigating the impact of supply chain disruption. Therefore, IT capabilities must include real-time analytics.
This was reflected in the report’s findings. 98% of shippers and 99% of 3PLs state there is an increasing need for 3PLs to respond to customer demand more speedily and with the right information to hand. There is definitely room for improvement here.
The technology is becoming more available and appropriate, and we may see this to be more so with the utilisation of blockchain technology for example. However, for the moment, both parties want to see more accurate and usable data on tracking and delivery, order processing, and fulfilment processes. They would also like to see data being more usable for customer service.
It stands to reason, therefore, that much of this centres on increasing communication between 3PLs and shippers. This is thought to depend on a number of different factors:
- Use more modern tech for communications rather than relying on email.
- Ensure context in communications to convey urgency and real-time need.
- Utilise a collaboration hub and/or digital workspace.
- Clearly communicate organisational structure and manage geographically dispersed teams.
How Does Blockchain Fit In?
As mentioned, blockchain is likely to help with some of the problems identified. Blockchain should open up possibilities for increasing visibility in 3PL even further. Each time a transaction is completed it could be recorded in real-time in a way that cannot then be compromised. The nature of blockchain, providing a permanent record that cannot be amended would massively increase visibility and transparency. It would also be available to everyone who needs it.
Furthermore, blockchain would help with the security issue we often face. Each transaction goes through a more rigorous process using an independent third party. Therefore, it cannot be tampered with or changed without complete agreement.
However, blockchain can also be seen as the fad of the moment and isn’t necessarily ideal, certainly at this stage, for everyone. Even the biggest parties are still running trials, such as IBM and Maersk. Nonetheless, certain industries, such as food, stand to benefit the most. It’s unlikely that it is ‘just a fad’ and we should all be giving it our attention in terms of its capabilities. It’s early days but we should definitely have it on our agenda.
Digitalisation and Automation in 3PL
Digitalisation and automation have been an ongoing trend for a while. However, the pace isn’t really letting up. As technology advances then efficiencies continue to be gained, along with greater visibility and safety. We’re seeing its impact everywhere from vehicles to warehousing.
The workshop identified that there is a place for greater use of data in order to predict and therefore minimise the number of vehicle failures and problems. Vehicular data regarding performance, as well as data regarding individual drivers and operators, can positively impact costs. An interesting area for attention is that at present only a tiny percentage of both shippers and 3PLs use autonomous vehicles. However, 27% report that they will be investing in autonomous vehicles in the future. Again, it is early days.
Human Resources and Talent
Technology is only as good as the talent behind it. With such rapid and notable changes on the IT horizon, the talent available needs to keep pace. Supply chain leaders are becoming quite a different breed to what was required of them 10 or 20 years ago. Automation won’t remove the need for talent – it will change the talent you need.
The Future of Technology in 3PL
There’s no doubting that we continue to need to keep a close eye on the developments and trends in IT and its role in 3PL. The 2018 Third Party Logistics Report goes a long way to helping with that, as will future workshops and reports. IT will enable 3PL to increase its capabilities and its success as we head into the future.