Even in the best of times, parcel delivery companies and third-party logistics (3PLs) encounter bumps that hinder deliveries and negatively affect KPIs. Errors occur. Changes happen midstream. And when something breaks or cannot accommodate a change, the metric reveals it and ultimately, the process and profitability take a hit.
Delivery is growing and is increasingly outsourced. Parcel and Last Mile logistics operations are being hit by a “drastic increase in small parcel residential deliveries,” John Haber, the CEO of Spend Management Experts, told Logistics Management Magazine, referring to the impact of COVID.
Additionally, the U.S. Last Mile market is growing at a bit over 12% annually and is expected to be $51 billion in 2022, up from $35.32 billion in 2019. Research and Markets forecasts the 3PL industry market to be $1.7 trillion dollars globally by 2025.
In an era focused on worker safety, while simultaneously being burdened with a huge increase in volume, delivery companies can benefit from incremental process improvements that add speed or help increase delivery success and thereby, customer satisfaction.
Achieve “Faster Speed to Market, End-to-End Visibility and Better Data Quality”
Industry experts note that companies are investing in innovations and technology to increase efficiency, improve processes and meet complex shipper requirements. Greg Aimi, vice president and team manager at Gartner, commented to Logistics Magazine that the logistics industry is seeking “to accommodate increasing shipper requirements through a combination of acquisitions, organic growth strategies and investments in innovation—such as digital technologies and processes.” While logistics outsourcing is often viewed as a way to reduce costs, he added, “more and more shippers are seeking innovative solutions that can improve process and service as well.”
The 2020 Gartner Logistics Outsourcing Survey and Analysis echoed this loudly, finding that “over 80% of professionals indicate that they plan to significantly increase logistics outsourcing budgets beyond warehousing and fulfillment in 2020.” The report states that the real driver is the “need to update operations technology and support increasingly complex logistics operations,” to deliver “faster speed to market, end-to-end visibility and better data quality.”
Saying ‘So What?’ to Tech May be Your Ticket out the Door
Operations managers who see beyond the day-to-day issues and focus on the longer-term goals of driving efficiency and meeting complex shipper requirements will gain the competitive advantage. It’s never been more important to address issues such as scaling at peak, scheduling labor predictably and conquering the last mile.
Tech innovation is bringing power and flexibility to courier, express and parcel (CEP) companies and 3PLs in a range of forms. Here are some key technologies to watch:
AI/Machine Learning – 3PLs can anticipate machine learning that forecasts order demand, labor needs and scheduling. Future data collection can enable predictive maintenance and schedule quality audits.
Augmented Reality – AR overlays with real-time status data and ancillary data improve efficiency, such as with van loading and search & find.
Blockchain – Blockchain acts as a ledger, but adds speed, efficiency, transparency and security to transactions and transactional data. Blockchain helps with shipment tracking, contracts and payment processing, among other areas.
Drones, Robots and Cobots – Cobots, otherwise known as robots designed to work alongside human employees, plus drones and robots, are flexible components that can be added or removed as needed, helping warehouses scale at peak.
Smart Device Mobile Data Capture – Scanning with smart devices, such as smartphones and wearables, is a path to more robust, fast and flexible mobile data capture solutions. Smart devices can also accommodate augmented reality, allowing data about the package or its delivery to be embedded into the information stream for each package and overlaid directly on the device screen.
We’re Not in the Best of Times
COVID added a layer of complexity and risk to today’s CEP and 3PL environments. Global freight took a huge hit, affecting carrier loads and dropping rates. At the same time, B2C parcel shipping, overnight and same-day service jumped, driving more profit into the risky area of the last mile. The strain on CEPs and 3PLs is amplifying any risk in the process and revealing gaps in visibility.
Additional expenses come with worker protections. To ensure contactless delivery and safe work environments, companies are investing in new processes and technology as well as personal protective gear and sanitation stations. In addition, they are incurring increased labor costs due to social distancing requirements, lost man hours and overtime, according to Logistics Management.
Technology Is the Future of Distribution and Fulfillment
In April 2020, speaking to Inbound Logistics Magazine, Brian Southwell, vice president of business development and marketing with 3PL Taylored Services, touted technology to navigate supply chain disruption, noting that it will differentiate companies over time. “We know technology is the future of distribution and fulfillment. It’s necessary to maintain efficiencies and enable proper labor planning,” he said, adding, technology will make a difference for the 3PLs and shippers that properly employ it, in the short term, post-COVID and in the long term. “Shippers that have access to the technology needed to quickly handle growing volumes will be better positioned to support clients.”
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