April 2017 | Sponsored | Knowledge Base

Consumer Demand Helping Drive 3PL Industry Growth

Tags: 3PL, Transportation Management Systems (TMS), Logistics, Technology , Third-Party Logistics, Supply Chain

Frank McGuigan is President and Chief Operating Officer, Transplace, 888-445-9425

In recent years, shippers have encountered new standards of velocity, market choice, and cost for their products. Consumers are demanding better variety and greater availability at the lowest possible cost.

These demands put increasing pressure on retailers, who in turn, pass that burden on to their suppliers—further increasing complexity and intensifying pressure on supply chains.

In order to meet continually changing consumer demands and expectations in an increasingly competitive market, shippers need a fast, efficient supply chain. As a result, many organizations are turning to third-party logistics (3PL) providers and enhanced transportation management technology to deliver the velocity, visibility, predictability, and control they need.

TODAY'S NEXT-GEN TMS MEETS TODAY'S SUPPLY CHAIN NEEDS

Today's supply chain requirements demand more advanced tools. Fortunately, as the supply chain has evolved, so too have transportation management systems (TMS)—now providing organizations with greater visibility and control over their supply chain than ever before.

This next-generation TMS technology provides a comprehensive, graphical view of all shipments and dynamic dashboards of key performance indicators, while also incorporating relevant information from the web, including weather and traffic alerts, to give organizations a 360-degree view of their entire transportation network at all times. Some systems can even help "predict the future" and alert shippers of potential disruptions, allowing them to proactively take steps to address those issues in order to maintain smooth operations and high levels of customer service.

COMBINING TECHNOLOGY AND INDUSTRY EXPERTISE

The need for this next-gen technology has contributed to the continued growth of the 3PL market. While 10 to 15 years ago shippers would engage with 3PLs as a means to access technology, that technology is more ubiquitous and readily accessible today.

Technology, however, is only part of the solution. I could put a piano in my home, and have noise instead of music, as I have the tool, but not the expertise to create the music. Today's 3PLs provide a deeper understanding of the key processes that are necessary for supply chain excellence within the specific verticals in which a shipper resides. This specialized knowledge and capability is as critical as advanced technology. Furthermore, their ability to truly leverage the strength and depth of their 3PL's network of shippers is how maximum value is ultimately delivered.

Understanding and executing upon on-time delivery is a given nowadays. 3PLs are being asked to create better metrics to provide both added understanding and a deeper perspective as to what's occurring inside their business yesterday, in real time, and tomorrow. Status updates that are more timely and proactive are becoming essential in the supply chain.

TRUE PARTNERSHIP TO DRIVE OPERATIONAL EXCELLENCE

While a TMS can have a significant impact on your supply chain operations, it's not automatically going to "fix" your entire network. You need the right strategy and processes behind it. Shippers looking for technology to incorporate into their transportation operations should first take the opportunity to benchmark their network around service, customer experience, and cost. This exercise will provide specific intelligence about opportunities in their network and whether a technology solution, or outsourcing to a 3PL, is best for their business.

For shippers, a 3PL should not just be prescribing a technology for your transportation network, but must truly have the ability to offer the operational expertise and ideas for continual improvement necessary to drive supply chain excellence. Transportation optimization is more than moving freight at the lowest cost/best mode or finding a short-term performance boost; it's about continuous improvement delivered through smart, data-driven planning and efficient execution at both the lane and network level. Shippers should find a partner that has a demonstrable ability to deliver and execute throughout the entire supply chain, creating both enhanced velocity and a high level of service to customers.