The Evolving Role of 3PLs
The list of services provided by 3PLs is constantly evolving. Born as transactional players, 3PLs have morphed into much more. Now filling partnership roles, more 3PLs are offering valuable consultative and technology services on top of their initial functions of transportation and warehousing.
As customers ask 3PLs for more help navigating their complex freight transportation processes, 3PLs are responding in progressive ways. Countless value-added IT services have been developed in recent years to meet requests for more visibility and cost reduction.
Providing and managing an overarching platform like transportation or warehouse management systems is quickly becoming the norm. In fact, when asked if IT expertise and capabilities are a necessary offering from 3PLs, 93 percent of shippers say yes, according to the 2016 Third Party Logistics Study.
Within these increasingly standard offerings, 3PLs are providing solutions through the elimination of manual data entry, automation of essential functions – like procurement, dispatching, billing, reporting – and easy identification of specific problems and opportunities. GPS technologies have also become the norm, giving shippers real-time visibility to their product, insights on driver behavior and performance, and data about exactly where costs can be cut.
Yet the same report also says that only 59 percent of shippers are satisfied with their 3PL’s IT capabilities. This means there is much room for advancement. The industry is still in the early stages of seeing maximum benefits from its robust data sets and IT investments.
So what’s next? With operational technology capturing countless data sets for freight, 3PLs today have access to massive amounts of intelligence. Driving innovation further, modern shippers don’t want to just receive this data, they want help interpreting it and putting it into action. 3PLs must be able to sit at the strategy table with customers and provide this expertise.
More and more 3PLs are beginning to offer services that are strategic, adding capabilities such as data analysis, predictive modeling, and visualization for network and supply chain planning. Whether they are building custom platforms, purchasing turn-key software solutions, or acquiring data companies, 3PLs are beginning to leverage more of the endless shipment intelligence that is at their fingertips.
Currently seen as a stand-out service, deep data analysis will soon be the next standard for 3PLs. Being able to track, interpret, and pull meaningful ideas from data will be expected. This is becoming the responsibility of the 3PL rather than the shipper because 3PLs have the expertise and access. They are acting as guides, leading customers through what their unique data means for their business. On top of providing strategic insights, 3PLs must figure out how to help their customers align IT and operations. It’s one thing to identify an opportunity within data, and another to implement a solution.
In order to fill this new role, 3PLs must know their customers’ businesses on a deeper level. With an understanding of key performance indicators (KPIs) 3PLs can better evaluate customer data and call out opportunities that help shippers meet their business goals. Providing this level of understanding requires a partner. No longer is it just about facilitating product pick-up and delivery, it’s playing a major part in reaching brand objectives.
They are digging into historical data as well as real-time information, seeking insights on how to improve operations and further cut costs. Algorithms can quickly calculate metrics such as on-time delivery rates, average skids per load, average transit days, and filter those by mode and location, providing solid information on costs, problem locations or carriers, and opportunities for improvement. With these tools, 3PLs can help customers to make informed business decisions.
There is an additional level of trust established when 3PLs provide this access. The data won’t be positive at every turn. Exposing these inefficiencies and working together to identify and fix them ultimately strengthens the new partnership role that 3PLs have adopted.
Access to data intelligence can drastically change the game and turn the supply chain from a cost center to a competitive advantage. 3PLs have the opportunity to provide this differentiator, and the most advanced 3PLs are already doing so.
E.R. Williams is co-founder and technology lead of Zipline Logistics, an Ohio-based 3PL that specializes in providing transportation services and data intelligence for CPG and food and beverage customers.