Logistics 2018: Why IT will be different for 3PL

Logistics in 2018 will mean more data, more tech, and more exciting results. What is the IoT revolution bringing to 3PLs?
What’s the role of the modern Third Party Logistics (3PL) operator? For many, it’s a shifting role, moving into more tech-oriented industry. One study from Capgemini, Penn State, and Penske found that 98% of 3PLs believe improved, data-driven decision-making is essential to the future success of supply chain activities and processes.
Modern 3PLs are increasingly dissimilar from their predecessors. More importantly, logistics services of the near-future will be even further removed. This is because of a huge shift in the way supply chains operate. There are new tools, higher expectations, and shifting attitudes both from consumers and operators.
In 2015, delivery company DHL collaborated with Cisco to produce an in-depth study on technology’s affects on the logistics industry. They found that IoT technologies could have a $1.9+ trillion impact on the supply chain and logistics industries.

Want to track assets in Logistics? Make sure to check out our comparison of RTLS infrastructure.

Why now? What’s changing for 3PLs in 2018?

“Our main takeaway after so many instalments is that the managers of factories and warehouses expect an all-around management tool for their forklift fleet. A GPS-based system not giving accurate indoor location just is not the answer. A system providing super accurate indoor location data but lacking other key performance indicators also will not alleviate the pain. Our customers expect a complete productivity tool with a competitive price.”

The IoT has been slowly transforming nearly every vertical for the past several years. Rather than an explosion, it’s been a slow, calculated process. Businesses want to be sure they’ll succeed before implementing new solutions, making it a slow transition. However, there are several reasons that the near future will finally spell big changes for logistics management and shippers.
Shippers and managers alike are increasingly aware of the IT gap in the logistics industry. Now, most companies consider proper, modern IT usage a given. Customers don’t care so much about specific solutions or tools but rather about the results delivered. Data is now part of the trade, and a 3PL who can deliver clear and reliable data will always have a leg up on the competition.

Big data for logistics: 3PLs and shippers find real value

Logistics operators around the globe have likely already considered big data, data analytics, and every other form of the buzzword. Of course, while small companies and new start-ups have been leveraging data for years, it’s only just beginning to trend in logistics in any verifiable way.
-2017 3PL Study from Capgemini, Penn State, and Penske
Supply chain management involves many large, moving parts. Adding data into the mix and creating a valuable feedback loop hasn’t been easy. Moreover, established companies have been searching for proven use cases and real-world examples. Now, with the pressure to deliver faster and with absolutely minimal errors, IT has become a core focus. As a result, data generation and analytics have taken the front seat.
Data is all about verifying what works and what doesn’t. For the 3PL looking to close the IT gap while also proving ROI, data is the perfect starting point. Of course, it’s not all about the providers here. Their customers are demanding it. Like nearly every modern industry, customers are willing to make the switch to an operator that provides the best results.

Modern 3PLs go real-time to maximize results

Shipping isn’t what it used to be. A simple notification that a good was (or wasn’t!) delivered correctly is nowhere near enough information to keep modern businesses happy. Real-time data and insights help optimize transportation system and evaluate their network. Of course, data also acts as proof that the 3PLs have done their job. In short, nearly everyone involved finds value in accurate data.
Most importantly, customers crave—and are becoming accustomed to—this data.
As a result, active asset tracking is slowly taking over the industry. Operators can use active RFID or BLE to track assets and packages or deliver updates. The perfect example of this is in cold chain where Bluetooth tags not only allow for the optimization of assets but also act as proof that shippers are adhering to regulations.

How does that work?
The concept of affordable asset tracking and RTLS is taking over several industries; 3PLs just happen to be one of the most affected parties. These systems are created using tags like active RFID, Bluetooth, or WiFi. These tags are attached to assets, like packages, and continually send out a signal. This signal is picked up by routers and relayed to the cloud for analysis or later usage.
This particular use case in logistics has been making rounds for several years. However, recent breakthroughs in Bluetooth tags are drastically lowering costs and reinvigorating interest in tracking solutions. Read more on types of RTLS here.

New resources and renewed interest in IT

The aforementioned growing expectations of business owners and customers aren’t just bringing asset tracking solutions into logistics. They’re bringing in all kinds of new IoT technology.
From 3D printers to drones to beacons, there’s an endless array of new technologies coming into the logistics industry. The overall value proposition of a 3PL remains dependent on their basic operations, but IT is changing expectations about what that really means. Best of all, it’s not just trendy start-ups using topical technology to grab attention. Established companies are integrating modern tools into their established systems to achieve results their customers can get excited about.
Nearly every expected trend for logistics 2018 circle around the fact that tech is being used where traditional methods have failed. Last mile delivery needs to go beyond typical trucks and vans. In response, companies have turned to nearly every possibility imaginable: drones launched from delivery trucks, delivery robots that maneuver sidewalks, Uber and Lyft for deliveries.
Then there’s Uber-for-trucking styled apps, warehouse robotics and analytics, and fully digital logistics teams. A traditional industry is being forced to get creative.

What else is driving changes? Amazon.

Compared to ways of modern Amazon, the past shipping industry looks almost like a slow, arduous process. Now, Amazon is leading the charge in make logistics completely modernized. In the words of established industry player Cerasis:

“Supply chains must accept that they cannot equal the power of Amazon’s supply chain without embracing these new trends. New technologies are great, but chances are Amazon has already implemented them.”
The Most Impactful Supply Chain & Logistics Trends in 2017*

*(this is also a great read for trends and changes to the US market in 2017!)
What started just as a revolution in retail is transforming other industries, shaking the cage of traditional logistics. The results remain to be seen (though there will surely be plenty of data to determine the winners). As of now, we only know that the “Amazon Effect” is effecting nearly everyone.

Choosing a 3PL

With all the modern tools available, how can you choose the right 3PL? There’s a lot of different topics to be weighed—not the least of which is determining how valuable are IT solutions for you. Many companies are happy with the basic “vanilla” IT offerings, but if you’re looking for more, it’s important to know what you expect in terms of ROI. What problems should the technology solve? How would a smarter solution help you in the long run?
One study by JDA sought to understand the gap in expectations between shippers and 3PLs. Most intriguingly, they found that, even though IT is perceived as important, the actual state of the industry didn’t entirely reflect that. Shippers repeatedly rated 3PL tech capabilities as “modest.”

“There is a gap between what shippers expect and what logistics providers think they can deliver.”
3PLs are Buzzing with Innovation – JDA and SCDigest

The result of this disconnect between expectations and current realities is crucial when considering a provider. Realism in terms of what technology is offered and utilized as well as how this will directly affect ROI must be carefully considered before moving forward.