A New Phase in Logistics with 3PL Services
Sumit holds vast experiences in management consulting, business development, business strategy, financial modeling. With over four years of work experience with the finance industry giants, he came up with his own venture GoBOLT in September2015.In today's economy, logistics is the most emerging industry. Logistics industry is the trade of infrastructure, technology and new types of service providers, which defines whether it is able to help its customers turn down their costs and provide effective services and cost effective flow of goods on which other commercial sectors depend.
In logistics, the third party logistics provider has a vital role in Supply Chain. According to The Council of Supply Chain Management Professional (CSCMP), 3PLs provide transportation, warehousing, cross docking, inventory management, packaging and freight forwarding. 3PL is the activity of outsourcing activities related to Logistics and Distribution. The 3PL industry includes Logistics Solution Provider and the shippers whose business processes they support. The speed of digital transactions has generated an unpredictable demand for fast and efficient logistics services in the
e-Commerce space. However, the demand is generally so much that it is beyond the scope of an e-Commerce service provider to handle all the logistics on their own. This has ensured the rise of 3rd party logistics service providers. To encounter the rising demands, these new age companies are changing the way logistics works. Digital multichannel tracking systems are becoming the preferable mode for monitoring goods on the move.
Like most other industries, transportation and logistics is currently confronting massive change and like all changes, this brings both challenge and opportunity. New technology, new market entries, new customer expectations and new business models there are many ways the sector could grow to meet these challenges. Despite current and past growth rates, we believe that the industry growth has yet to hit a turning point.
Demand for extreme efficiency of inventory and working capital management carry forward to drive reliance upon third parties for assistance with managing operations across multiple geographies and with many suppliers. Once economic weakness recedes and transportation demand again
escalates, logistics costs will raise quickly. Significant capacity exits during this downfall and a continued driver shortage implicit a future need for sophisticated solutions, which will position 3PL providers for even more rapid rates of advancement.
Another key driver of growth, in our opinion, will be increased outsourcing of 3PL functions by middle market companies. Most of the middle market manufacturers, wholesalers and retailers lack the knowledge of internal controls which are necessary to address logistics challenges and can no longer take transportation and supply chain costs for granted. Even industrial customers now expect to get shipments faster, more flexibly, and with more transparency with better facilities.
It is no surprise across the industry that both operating models and profitability are forced and the pace of transformation of large manufacturing and retail customers may turnout to be even faster for private final consumers.
There is no other industry where so many industry experts ascribe a high importance to data and analytics in the next five years than transportation and logistics. We start by taking a closer look at some of the key disrupting factors such as changing customer expectations, technological breakthroughs, and new entrants to the industry and new ways to compete or collaborate.
These disruptions have very different implications for individual companies, depending on which segments they operate in, their type of ownership, and where they are located. Lack of digital culture and training is the biggest challenge facing transportation and logistics companies, but automation could reshape the workforce. Labour is a critical element of any logistics operating model, and up till now there's always been dealing between service levels and costs. But automation breaks down this equation, allowing firms to offer better service and save money at the same time. Some of the industry's most labour intensive processes are on the way to being fully or partially automated from warehousing to last mile delivery.
It is not always easy to choose a 3rd party logistics provider because of the many different aspects revolving around them. The first thing you should do considering 3PL services is to determine exactly what types of services your company needs, as this can affect the type of provider that's ideal for your business. In the beginning, you search for the perfect 3PL provider, analyze your accounts and determine how well your company is performing. Then you should set a line to your current supply chain costs and examine existing relationships with your carriers, along with any advances or allowances that might be made in the future. You should then ask the 3PL provider for a request for information (RFI), which provides you with a detailed plan that the provider has for your company.
The upsides of choosing a 3PL provider to manage certain aspects can make it incredibly worthwhile. You'll be able to see the improvements in various areas of your business as follows: Improved customer service, with a better relationship with your customers resulting from fast and efficient service. Increased flexibility and scalability, with the ability to scale back operations over varied time frames. Through larger resource network compared to inhouse supply chains, further increasing efficiency and effectiveness. Saved time as well as money without the need to invest in multiple areas of your business while experiencing higher returns. Professional services that keep your business updated to stay in line with current trends and new technologies in logistics.
Digital multi channel tracking systems are becoming the preferable mode for monitoring goods on the move
Another key driver of growth, in our opinion, will be increased outsourcing of 3PL functions by middle market companies. Most of the middle market manufacturers, wholesalers and retailers lack the knowledge of internal controls which are necessary to address logistics challenges and can no longer take transportation and supply chain costs for granted. Even industrial customers now expect to get shipments faster, more flexibly, and with more transparency with better facilities.
It is no surprise across the industry that both operating models and profitability are forced and the pace of transformation of large manufacturing and retail customers may turnout to be even faster for private final consumers.
There is no other industry where so many industry experts ascribe a high importance to data and analytics in the next five years than transportation and logistics. We start by taking a closer look at some of the key disrupting factors such as changing customer expectations, technological breakthroughs, and new entrants to the industry and new ways to compete or collaborate.
These disruptions have very different implications for individual companies, depending on which segments they operate in, their type of ownership, and where they are located. Lack of digital culture and training is the biggest challenge facing transportation and logistics companies, but automation could reshape the workforce. Labour is a critical element of any logistics operating model, and up till now there's always been dealing between service levels and costs. But automation breaks down this equation, allowing firms to offer better service and save money at the same time. Some of the industry's most labour intensive processes are on the way to being fully or partially automated from warehousing to last mile delivery.
It is not always easy to choose a 3rd party logistics provider because of the many different aspects revolving around them. The first thing you should do considering 3PL services is to determine exactly what types of services your company needs, as this can affect the type of provider that's ideal for your business. In the beginning, you search for the perfect 3PL provider, analyze your accounts and determine how well your company is performing. Then you should set a line to your current supply chain costs and examine existing relationships with your carriers, along with any advances or allowances that might be made in the future. You should then ask the 3PL provider for a request for information (RFI), which provides you with a detailed plan that the provider has for your company.
The upsides of choosing a 3PL provider to manage certain aspects can make it incredibly worthwhile. You'll be able to see the improvements in various areas of your business as follows: Improved customer service, with a better relationship with your customers resulting from fast and efficient service. Increased flexibility and scalability, with the ability to scale back operations over varied time frames. Through larger resource network compared to inhouse supply chains, further increasing efficiency and effectiveness. Saved time as well as money without the need to invest in multiple areas of your business while experiencing higher returns. Professional services that keep your business updated to stay in line with current trends and new technologies in logistics.
