In the past, entering and competing in the Third Party Logistics (3PL) marketplace required sales savvy, options for inexpensive warehouse space and good operational management skills. With these things in hand, a 3PL could acquire clients, lease space, hire workers and launch operations in very short order. Price was always king and the 3PL with the lowest price usually won. Contracts were renewed provided the 3PL met its service levels and prices remained low. New 3PL companies sprouted overnight and everyone was happy.
Gone are the days where being the lowest-cost provider is enough to win the business. Today, customers expect 3PLs to offer advanced and adaptable solution offerings, which allows 3PLs to compete on a higher plane than just price. In turn, this enables more efficient and flexible operations and provides stronger returns for end clients. Becoming a technology-driven 3PL is not only the key to winning new contracts; it also provides stronger client partnerships, which are harder for the competition to overcome when contract renewal time arrives.
So, what exactly are these advanced solution offerings? It is not only advanced warehouse management systems (WMS) and transportation management systems (TMS) that ensure real-time visibility and accuracy. It is these applications working hand-in-hand with a client’s systems and users. Let’s look at a few examples of what is possible today.
Unlimited Visibility: 3PL’s now have the technology to offer their clients real-time information through secure browser applications. Clients can access this information at their office, at Starbucks via their Blackberry or smart phone, or at their end customer’s offices while discussing sales and delivery opportunities and/or issues. A client’s end customers and suppliers can also access the same information for broader supply chain collaboration. As a direct result, clients save money, improve customer service and improve margins.
Fast, Easy and Immediate Knowledge Transfer: For example, a client has a fast-breaking product opportunity that requires special packaging or other value-added services. The client can create their own detailed instruction documents, and even short video clips on proper techniques, and post them directly on their internal site. The 3PL operator can view these documents and videos through live hyperlinks on their workstations to aide in the process. As updates are posted the 3PL operator sees the changes immediately, including animated graphics if needed to draw attention – no email, no phone calls required. Clients benefit from faster speed to market, improved quality and consistency, and rapid response to changes.
Image-Driven RF Operations: The latest technologies allow 3PLs to provide RF operators with instructions using images and videos in combination with, or even in place of, traditional text data. 3PL clients benefit immediately from improved quality by showing images of the required unit of measure, the required packaging instructions, and kit assembly videos to RF operators unfamiliar with their products. A 3PL can deliver more complex operations while keeping operating costs below those of the manually-driven processes of its competitors. The 3PL also benefits from increased retention, closer client partnerships, and stronger value propositions for attracting new clients and revenue sources.
Merged Information with No Integration: Integration technology has advanced over the years to allow faster and easier integration with various client ERP applications. Today, separate client system data can be embedded directly on the 3PL’s WMS screens (PC and mobile RF). Users see information from both systems on a single screen without realizing two systems exist, all without extensive IT work required. Information sharing today also extends beyond text and numbers, and now includes full multimedia capabilities for embedding documents and images. Clients benefit from easier on-boarding of the new 3PL, less IT investment, and improved quality and efficiency of their 3PL partner.
With all of this capability in hand, today’s 3PL winners – both existing players and newcomers – can become valued, shared partners with the clients who need them in today’s ever changing economy. Without this technology advantage, 3PLs may be unable to reduce their prices low enough to overcome the higher client ROI offered by technology-driven competitors.
John P. Reichert is Product Manager, Warehouse Management Systems, at TECSYS Inc. His career encompasses close to twenty five years of strategic and operational expertise in product development, product management and deployment of ERP systems for domestic and international companies. Since 1998, Mr. Reichert has been a key contributor to the development and marketing of TECSYS’ WMS initiatives for healthcare and high-volume distribution companies. Prior to joining TECSYS, Mr. Reichert was a senior manager in R&D, product management and solution engineering with three logistics software companies. Prior to that, Mr. Reichert was with Frito-Lay where he was a key contributor in the development and deployment of distribution systems across the U.S. during a seven year span.