How distributors and 3PL companies are utilizing technology today to address the "Amazon Effect"

Technology has continued its inexorable evolution in recent years, particularly since the onset of the COVID-19 pandemic in early 2020. Third-party logistics (3PL) warehouses have had to adapt to meet consumers’ “I want it now” demands and expectations – primarily a result of what’s come to be known as the "Amazon Effect."

Technology can help 3PL providers predict supply chain hiccups and/or significant disruptions and plan when interventions may be needed to meet customer demands. Specifically, 3PL industry investments in technology aim to achieve one of two things: help a 3PL business grow its revenue opportunities or reduce cost and inefficiencies.

Technology can eliminate or significantly reduce manual work, allowing internal resources to focus on adding strategic or operational value.

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Build, buy or partner?

A classic dilemma in the field today is that of build vs. buy vs. partner. Some companies are starting to come to terms with the fact that not everything needs to be built within their four walls; sometimes it’s more beneficial to procure or partner with others to accelerate growth.

The speed-to-market that’s available when looking outside an organization contributes to this growth. However, some companies continue to be skeptical about buying or partnering and still prefer to build themselves.

This reluctance tends to be caused by a perception that companies developing the new technologies don’t have a firm understanding of the software that’s needed in supply chain operations; creating a technology on their own, some companies think, gives them tools perfectly designed for success. Ultimately, companies need to evaluate their competitive advantage and the role technology plays in meeting specific strategic goals and objectives.

Forecasting, automation and connection are three technological solutions that may allow manufacturers and distributors to use less capital while responding quickly to market changes.

Artificial intelligence and machine learning (AI and ML, respectively) can quickly analyze high volumes of supply and demand data, identify patterns and react accordingly – all without human intervention.

Challenges facing 3PL providers, and how AI-based software can help

Lack of real-time data causes delays in decision-making. AI software can provide real-time data that helps 3PL providers optimize their daily routines.

Route planning inefficiencies cause longer delivery times and increased shipping costs. AI-based route optimization can allow 3PL businesses to plan more efficient routes, leading to shorter delivery times and lower shipping costs.

Order fulfillment errors inevitably lead to unhappy customers. When using an AI route planner, customer orders are submitted over the integration layer, which supports 3PL providers in designing optimal routes for effective fleet management and on-time deliveries – ultimately increasing customer satisfaction.

The AI and ML market is a competitive space with many successful providers. Top providers that can help with improving forecasting methods include:

  • IBM: IBM Cloud 
  • AWS: Machine Learning Services 
  • Google: Google AI 
  • Microsoft: Azure case study: 3M standardizes, automates and accelerates sales forecasting 

Robotic process automation (RPA) in 3PL

RPA, a business process automation technology based on software robots or AI workers, is projected to be an $8.75 billion market by 2024. RPA uses software to automate repetitive tasks such as freight management, order processing and more – freeing up human workers to instead focus on strategy and implementing changes.

Various functions in transportation and logistics are using RPA. Auto-tracking of goods results in fewer customer calls to check delivery status. RPA also can enable freight rerouting, automated reporting to drivers and efficient inventory management.

Benefits of RPA also include shipment scheduling and tracking, invoice processing, inventory processing and effective communications. Combined with efficient warehouse management software, robots can cause significant improvements in a supply chain’s productivity.

However, organizations with several deployed RPA bots may require significant human support. Therefore, robotic process automation management (RPAM) is crucial.

Connection via the cloud

Moving to the cloud greatly reduces the complexity of building connections and communications across all systems – from planning and warehouse management systems (WMS) to real-time tracking for manufacturers and consumers. For retailers, the cloud can even connect your point-of-sale (POS) systems with your 3PL’s inventory database, providing instant insight into your existing supply.

Cloud-based multi-carrier shipping solutions allow a 3PL provider to manage shipments and transactions and consolidations of shipments moving quickly and easily to the same ship-to location or geographic region. It also makes it easier to calculate the true landed cost of each shipment, including surcharges, fees and duties.

Real-time operational insights allow a 3PL business to see what’s happening across all shipments, monitor KPIs and respond as needed. On-demand, real time insight allows a 3PL provider to prevent bottlenecks and unnecessary delays. This allows companies to easily connect with their suppliers, vendors and customers. It also ensures that everyone across the network has access to the same information simultaneously, reducing the communication time needed and resulting in efficient integration throughout the supply chain.

The cloud enables enhanced collaboration between team members, anytime and anywhere. This expands remote capabilities and allows for continuous planning development.

Because expectations for a fast and efficient supply chain aren’t disappearing, another necessary initiative in the 3PL industry is greater visibility for, awareness of and focus on environmental, social and governance (ESG) and sustainability efforts.

In conclusion, it’s important that companies continue to adapt to meet consumer needs, whether that’s through technological improvement or sustainability efforts. However, adaptation is going to require the implementation of change management, and the success of these new technologies will be dependent on how the organization adopts and responds to these changes.

Clearly, there isn’t a one-size-fits-all technology solution for all organizations. To be successful, you need the right mix of solutions that align with your short- and long- term business goals.

That’s where Mazars comes in. We’re deeply focused on the intersection of people, process and technology. We work side by side with manufacturing & distribution organizations – from assessment and strategic road maps to implementation – to build a technology solution that will deliver the greatest value and benefit.

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Optimizing inventory management with the right technology

Discover how the right technology, including artificial intelligence (AI), robotic process automation (RPA) and the cloud, help M&D organizations optimize their inventory processes.

The information provided here is for general guidance only, and does not constitute the provision of tax advice, accounting services, investment advice, legal advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal or other competent advisers.

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