The Evolution of Global 3PL Automation and Technology Trends
Introduction
It’s safe to say that the first third of the 2020 decade has been unprecedented for the logistics industry and supply chain management. The post-pandemic Third-Party Logistics (3PL) market is now projected to reach 1.3 trillion USD in 2024 with an expected annual growth rate of (CAGR 2024-2028) 2.39% according to Statista.
3PLs have adapted to the unpredictability of consumer demand and supply-chain snags by accelerating their integration of advanced technologies.
“87% of shippers and logistics providers have maintained or grew their technology investments since 2020, and 93% said they intend to increase their spending over the next three years” Indicates a recent Logistics Leaders Survey by McKinsey
Exploring Advanced Technologies
Incorporating advanced technologies and digitizing their offerings has been imperative for 3PL companies to not only meet the evolving demands of their customers but also stay competitive within their market. Among the various advancements, three of the key game-changing technologies: warehouse automation, the Internet of Things (IoT), and data analytics stand out as game-changers.
These technologies revolutionize the way warehouses and supply chains operate and are now seen as not just ‘nice to have’ but vital for companies to increase efficiency, and improve data transparency, which fortify 3PL business growth.
3PLs are focused on business growth, specifically to target new customers, and technology adaptation will continue to play a critical role with their performance goals.—Extensiv’s 3PL Warehouse Benchmark Report
The world of logistics and supply chain management for 3PL companies is leaving the stratosphere in terms of technological innovation. Staying put with obsolete automation and paper filing will leave companies in the dust competitively. Keeping pace with cutting-edge automation and digitization trends keeps 3PL companies competitive and propels growth. Taking the initiative to study current trends and then adopt automation and digitization products from adjacent or partner companies allows 3PL companies to hold the keys to their own destiny.
‘86% of companies see adding new customers as their top opportunity for 2024, with 50% of companies vying to automate warehouse processes as their second biggest opportunity.’ —Extensiv Benchmark report
As we delve into the fascinating outlook of 3PL automation and technology trends, it will be revealed how efficiency, resilience, and innovation are becoming the three essential elements of 3PL growth and success.
Understanding 3PL Warehouse Automation
At the heart of modern logistics lies warehouse automation, a concept that has gained significant traction in recent years. Warehouse automation encompasses a spectrum of technologies, from mobile robots to sophisticated software solutions, all aimed at optimizing warehouse operations.
77% of respondents expect to implement additional technologies in their warehouses in 2024.—2023 Extinsiv Third-Party Logistics Warehouse Benchmark Report
By leveraging automation, companies can streamline picking, packing, and inventory management processes, thereby enhancing accuracy, speed, and cost-effectiveness. These solutions can include Automated Storage and Retrieval Systems (ASRS), robotic pickers and packers, goods-to-person systems, and advanced Warehouse Management Software (WMS).
“Warehouse automation can help reduce the need for manual labor and improve accuracy and speed in the fulfillment of orders.” According to a major Warehouse Management Software provider, Ship Hero.
Ship Hero continues to clarify that the solution goals are to increase efficiency, reduce errors, and improve the overall operation of a warehouse. Some common benefits of warehouse automation solutions include reduced labor costs, faster fulfillment times, and improved accuracy and tracking of inventory.
Warehouse automation also increases picking and placing efficiency, which enables faster fulfillment.
Participants who took 90 minutes or less to fulfill an order were on average, 1.5 times more likely to experience medium to high profitability growth. Those who fulfilled them in a shorter span of 30 minutes were 1.67 more likely to demonstrate medium to high profitability growth.—Suggests Extensiv's data
The surge in demand for warehouse automation can be attributed to several factors, including the exponential growth of e-commerce and the need for operational agility, particularly in the face of global disruptions like the COVID-19 pandemic.
In the aforementioned McKinsey report, logistics providers are increasingly turning towards leading-edge solutions such as robotics to spur “the next frontier of productivity” Automated Guided Vehicles (AGV) are already in broad use, which is why logistics providers are looking to new horizons for new warehouse technologies like fully automated item picking systems and fully automated case picking (ASRS) to become more competitive.
However, these technologies can have nuances regarding implementation, McKinsey alludes. Companies must be discerning and get the right systems in place ‘[to build] capabilities to scale’ to ensure that ‘the chosen solutions are sustainable and scalable’.
With supply chain complexities rising, businesses increasingly turn to automation to navigate uncertainties and meet evolving consumer expectations.
Unlocking Supply Chain Visibility with IoT
57% of respondents in their collaborative supply chain survey intend to adopt IoT technology within the next 5 years, and 23% have already done so, according to the MHI 2024 Innovative Supply Chain Report.
The Internet of Things (IoT) has emerged as a game-changer in supply chain visibility, offering real-time insights into every facet of the logistics ecosystem. By leveraging IoT devices such as sensors and RFID tags, companies can track shipments, monitor conditions, and optimize resource utilization with unprecedented granularity. This interconnectedness enhances transparency and fosters greater efficiency, responsiveness, and agility in the supply chain.
39% of the MHI report stated that IoT could potentially create a competitive advantage.
As IoT continues to be adopted by logistics providers, they are furthering this adoption by exploring innovative solutions such as smart labels.
Smart labels are an example of an IoT-enabled technology that will seriously impact the logistics industry soon according to DHL. Smart labels – which DHL refers to as Smart Printables” – will allow the company to do new processes on a global scale.
“IoT is in the middle of our trend radar as one of the most impactful and important trends for every organization to understand and leverage in their supply chain.” —Christopher Fuss, Global Head of DHL SmartSolutions IoT
By embracing IoT-enabled technologies, businesses can stay ahead of the curve and deliver superior customer experiences in an increasingly competitive landscape.
Embracing Big Data Analytics
“About 58% of shipping companies have seen up to 25% reduction in the supply chain, and 60% 3PL service providers believe that the ‘Amazon Effect’ has had a disruptive effect on the supply chain.”—InfosysBPM insights
Knowledge is power, and nowhere is this more evident than in the logistics industry with big data analytics. By harnessing the vast arrays of data generated across the supply chain, 3PL companies can gain unprecedented insights into market trends, consumer behavior, and operational inefficiencies. Advanced data analytics tools help make sense of this vast data to usher in better strategic decisions for 3PL companies.
“In 2024, we expect to see more and more businesses turning to big data to predict risks and help make their supply chains more agile.”—DHL Four Logistics Trends to Watch in 2024
Data-led approaches help 3PL providers stay adaptable through metric analysis and top-notch shipping. Building data science teams can turn data into insightful revelations, improving supply chain visibility, resource planning, inventory control, and cost savings.
Predictive capabilities allow a more proactive approach generating insights for mitigating risks, optimizing routes, and enhancing overall resilience.
“Both 3PL service providers and shippers expect to move from transactional relationships to strategic partnerships with each other.” —Suggests a survey conducted by InfosysBPM
Conclusion — the Convergence of Emerging Technologies
As we gaze into the future of third-party logistics, it's clear that the convergence of emerging technologies will reshape the 3PL industry landscape in profound ways. From warehouse robotics and IoT smart labeling to advanced data analytics and beyond, integrating innovative tools has become imperative. These automation systems and technologies will increase efficiencies, enhance transparency, and promote more agile, adaptive logistics models.
In addition, the rise of personalized logistics services and the expansion of e-commerce logistics will present new opportunities and challenges for 3PL providers.
By embracing innovation, cultivating sustainability, and prioritizing data security, companies can position themselves for success in an increasingly dynamic and interconnected world.
The evolution of global 3PL automation and technology trends heralds a new era of innovation, disruption, and opportunity. By embracing automation, harnessing the power of data analytics, and prioritizing sustainability, companies can navigate the complexities of the modern supply chain landscape with confidence and resilience.
As we embark on this transformative journey, collaboration, agility, and a relentless commitment to excellence will be the keys to unlocking success in the ever-evolving logistics and supply chain management world.
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Works Cited
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