Third-Party Logistics Providers Need Data Analytics to Save Money
Logistics data analytics can provide an invaluable competitive edge to third-party logistics (3PL) providers. 3PLs face a rapidly changing market. Supply chain disruptions and the rapid growth of e-commerce mean they must be ready to adapt if they want to continue providing high-quality services for their customers.
Data analytics allow 3PLs to uncover new insights to improve decision-making and provide cost savings.
How 3PLs Can Leverage Logistics Data Analytics
Today, businesses of all kinds have access to more information than ever — and a range of analytics tools that can extract deep insights from large data sets.
1. Improved Risk Management
Modern 3PLs face various risks. The right data makes it easier to take a proactive risk management approach, making better decisions regarding carrier selection, freight tenders and the business partnerships the 3PL will establish.
Better data can also make it easier to identify potential risks and their potential impact. Identifying these threats can make a proactive risk management approach easier to implement and more effective — potentially providing significant cost savings.
Some 3PL tools even utilize advanced technology like AI to improve supply chain resilience and risk management. 3PLs can use them to uncover insights that less advanced analytics technology wouldn’t be able to find — securing a valuable competitive advantage.
2. Lower Transportation Costs
Data collected from the supply chain can make it easier to visualize and manage daily operations. 3PLs can use data dashboards and similar tools to centralize the information they gather and provide it in an easy-to-understand format for managers, supply chain specialists and key decision-makers.
3PL team members can then more easily track key KPIs — like cost per unit, order accuracy and processing time. Analytics tools will also help the 3PL identify relationships between business practices and these KPIs, making it easier to spot operational bottlenecks and inefficiencies.
3. Stronger 3PL-Client Relationships
Data from the supply chain and logistics operations can make it much easier to analyze and respond to changes in the global supply chain market. This information can also make 3PLs a better business partner to their clients. The right shipping and logistics analysis allows a 3PL’s associates to secure a valuable competitive advantage.
One recent study of the 3PL market found that interest in robotics and data analytics is rising fast among shippers. More 3PLs are adopting data analytics technology, and these tools may become critical for strong client relationships. Clients may look elsewhere if a business can’t offer a tool its competition can.
Data Analytics Can Provide Major Cost Savings
Many of the advantages data analytics provide can help 3PLs save time and money. Managing risk reduces the chance that an unforeseen hazard will cost a 3PL significant resources.
Lower transportation costs can reduce one of the biggest expenses for a 3PL — and allow the company to pass cost savings on transportation to its clients.
Better relationships with clients can provide steadier business for a 3PL, potentially decreasing costs associated with marketing and client relationship management.
3PL Data Analytics in Practice
Various 3PL data analytics approaches exist. These data analytics strategies offer benefits throughout an organization by providing workers with better information that can streamline operations or be passed onto business partners and clients.
Supply Chain Visibility and Transparency
Low supply chain visibility can make accurate predictions about availability, shipping times and processing speed much more difficult.
New data-collection and organization tools allow 3PLs to develop a much deeper understanding of how products are moving through the supply chain and how effectively current shipping partners are managing their operations.
Supply chain management tools may also lay the foundation for IoT-powered tracking and transparency. The right Internet of Things (IoT) tracking devices will let 3PLs monitor goods continuously as they move through the supply chain. These devices can provide information about a shipment’s current location, speed and shipping conditions.
This information can make it easier to track goods and predict shipping speed or delivery timing.
IoT supply chain monitoring may be especially valuable for 3PLs that offer cold chain management services. The same IoT device can track a shipment’s current location and temperature. It can immediately alert drivers and managers of an excursion, allowing them to respond quickly to prevent product spoilage.
Data-Driven Resource Planning
Enterprise resource planning (ERP) is an essential investment for any 3PL. It makes it much easier for managers to effectively understand and react to the business’s current resource planning needs.
Resource planning tools — along with software like warehouse management systems (WMS) and contact management systems (CMS) — can make managing essential business resources much easier.
These systems can also automate many administrative processes, like the generation of customer reports, helping to streamline client communication and business management.
KPI Dashboards and Data Visualizations
New data analytics tools allow 3PLs to centralize and organize information by using data dashboards. For example, KPI dashboards can provide managers and executives with a snapshot of current operations, performance and overall business health.
Strategic inventory dashboards can offer a real-time view of how inventory moves through the supply chain, making it easier to identify possible process issues.
Most logistics data analytics tools marketed to 3PLs offer a great deal of customization, so these tools can be adapted to fit the organization’s needs. They can provide information on different KPIs, prioritizing certain types of data and generating customized reports for clients, business partners or regulators as needed.
Using Logistics Data Analytics to Save Money in a Changing Market
The right analytics tools allow 3PLs to streamline their operations, save money and build stronger client relationships. Data dashboards, supply chain visibility tools, and systems like ERPs or WMSs can make it much easier to manage essential processes, automate work and make more informed decisions.
Early adopters of data analytics will secure a competitive advantage over other 3PLs, making them a more valuable investment for their clients.