What is the Future of Third Party Logistics in 2020?
What Can Your Business Expect from 3PL Providers in the Ever-Evolving Digital Age?
There’s no doubt the third party logistics (3PL) landscape has altered significantly within the last decade. As mobile technologies and ‘smart’ working practices continue to develop, further growth, and potential benefits, are inevitable.
With expected growth in third party logistics markets forecast to be as high as 15 percent, the demand to service in these markets in 2020 is sure to generate fierce competition.
A greater consumer demand for 24/7 services and reduced costs means efficiency and accuracy are going to be a crucial points for successful 3PL providers. Businesses will remain focused on the goal to drive down their own operational and labor costs by outsourcing logistics to 3PL service providers. But success will also depend on their willingness to adopt new technologies.
The following are the most influential changes predicted within the next 7 years. There’s a very good likelihood they will become common among most third party logistics companies.
1. Extended Collaboration Between Shippers and 3PL Companies
Third party logistics companies will rely heavily on technology to collaborate, connect, and interact with customers. Electronic data exchange services are going to be critical, not just for the performance and integrity of the info, but also to accommodate the speed of change.
Vendor managed inventory, where the supply chain vendor monitors the buyers inventory and makes periodic resupply decisions, are going to be commonplace and allow smaller 3PL services to operate via web-based portals and user-friendly access systems.
2. Mobile Application Expansion
Dependency on paper records in warehouses is becoming a continually diminishing memory. Everything will be focused around agility through mobility. As we’re already seeing, mobile devices are becoming more commonplace and will eventually be used by all third party logistics firms.
With the potential for RFID enabled devices to carry data information with them, product and providence for identification and traceability become easier. Customers are going to be ready to order and process freight shipments anytime, anywhere, 24/7.
3. Dedicated Smart Technology from Third Party Logistics
Third party logistics providers will see the advantages of investing in smarter IT and software systems which may deliver a quick and solid ROI.
By decreasing inefficiencies, software like Transportation Management Systems (TMS), will drive down costs and save time. As voice recognition becomes more accurate, voice prompts and commands are going to be standard within the supply chain process, like stock inquiries or freight tracking.
Improved speech recognition software also will allow workers to speak directly with their Warehouse Management System (WMS) to enhance stock records, speed up order turnarounds and shorten staff training periods.
4. Leveraging Massive Data and Knowledge Sharing
Cloud-based technologies are going to be employed by the bulk of third party logistics companies as they embrace the new age of ‘Big Data’.
3PLs will recognize the necessity to permit client access to their own systems to enhance efficiency in areas linked to seasonal trends, and therefore accommodate the demands of flexible operations. Shared data will also allow the traceability of an item at any given point within the supply chain.
5. A More Globalized Economy
In 2020, an increasingly globalized economy is going to be more integrated. 3PL providers are going to be expected to figure on a bigger scale with a distinctly international outlook.
Distribution will also expand globally with more opportunities opening up. This will create a more complex supply chain, varied costs, increased integration processes, and thus a rise in expert third party logistics.
The 3PL industry will face many challenges within the future, but by 2020 the world will also have grown dramatically, largely due to the expansion of emerging global markets.
As we’ve seen with the meteoric rise of technology itself, change can happen swiftly. We will see more and more mergers & acquisitions over the approaching 7 years within the third party logistics world.
With such a competitive landscape, we will also see more standardization in the expectations of shippers and supply chain managers. The foundational businesses, those that actually start the wheels turning, will experience the end benefits.
At Brimich Logistics, we strive to stay on the most productive cutting edge of 3PL technologies in order to serve you better.