With the disruption of e-commerce and the growing complexity of multichannel supply chains, more and more businesses are outsourcing their logistics services to third party logistics (3PL) providers for greater efficiency, productivity and customer satisfaction.
The global 3PL market is projected to reach over $1,100 Billion by 2024 as a wide range of industries turn to these providers to handle various levels of warehousing, order picking, packing, transportation and shipping operations. Many retail and e-commerce companies are employing 3PLs to keep up with high customer expectations set by big names like Amazon. Vast item selections, same-day shipping options and advanced order tracking have all become necessities to compete for business.
Meeting modern demands of order fulfillment
As these consumer demands grow, so too does the pressure on 3PLs to provide more customized services and faster, more accurate order fulfillment. It comes down to the 3PLs to not only facilitate shorter delivery windows and multichannel distribution for customer satisfaction, but also to support lean inventory methods to keep the shipper’s costs down. 3PLs need fast, accurate order picking systems that can handle both bulk orders and small, direct to consumer shipments. And, with many 3PLs serving hundreds of different customers, space optimization is essential when housing so many SKU varieties in once warehouse. Fast- and slow-moving items must be easily accessible without monopolizing an already limited storage space or inhibiting movement around the warehouse.
In order to overcome the challenge of meeting current client needs while also growing their business with new customers, 3PLs must maximize productivity with efficient operations – a task that is becoming increasingly difficult with manual processes alone. So why aren’t more 3PL providers adopting automation technology for warehousing and distribution services?
Overcoming uncertainty with flexible solutions
A 2018 study found that 25 percent of 3PL providers surveyed cited uncertainty in their ROI as the top reason for not pursuing automation. These businesses are hesitant to invest in a system that handles a specific product type when their contracts are often month-to month and typically don’t exceed one to two years. Additionally, with seasonal peaks and changing consumer preferences, clients’ products rapidly change in volume and type. Why invest in a rigid automation solution for a product today that may not even be in your warehouse tomorrow?
But technology has evolved. Automated warehouse and distribution solutions have become flexible and easily scalable. Robotic picking systems are capable of picking a near limitless variety of items and packaging sizes. This technology can quickly access both fast- and slow-moving inventory to create customized orders in any sequence. Additionally, when an automated storage and retrieval system (AS/RS) stores SKUs in plastic crates, the automation becomes even more flexible. The system can rapidly and accurately store and retrieve virtually any SKU as long as the product can fit in a plastic crate, tote, bin or container. Moreover, a scalable automation system enables a company to easily move the equipment if it needs relocate the automation to a new warehouse location.
These systems optimize space utilization with a compact, modular design and eliminate the labor-intensive process of walking to each storage location for individual order picking. When integrated with a Warehouse Control System (WCS), automated systems also offer complete traceability of products throughout a facility. This visibility can enable providers to have greater control over inventory management and order accuracy for better customer service.
Automation technology for rapid ROI
3PLs can leverage these versatile, scalable solutions to handle the ever-changing variety and volume of products in their warehouse. Cost and space-efficient, automation technology can be fast to install and easy to maintain, resulting in a rapid ROI. 3PL providers don’t need to be concerned that their investments will become obsolete, as these systems can easily adapt and expand with changing business needs and client fluctuations in the future. When armed with the right automation tools, 3PLs can increase productivity and efficiency across the supply chain, resulting in more sales for the client and faster, more accurate orders for the end-customer.
Author Adam Higgins