Becoming a Tech-Enabled 3PL: Tips and Advantages

By
December 22, 2023
5 min read
Becoming a Tech-Enabled 3PL: Tips and Advantages

In the present world of logistics and fulfillment, it's now more important than ever for Third-Party Logistics (3PL) providers to embrace technology. The rise in customer expectations and the influence of economic factors have forced a change in how 3PLs operate. 

With a growing demand for advanced technology, being a tech-enabled 3PL is not just a smart choice—it's crucial for growing and scaling. The current trend highlights a simple truth: to handle clients effectively and scale faster, adopting the latest tech is no longer optional but a must for 3PLs. 

This article explores practical tips and benefits for 3PL providers venturing into the world of tech, explaining why staying on top of technology is vital for meeting client needs and ensuring long-term growth.

What is a technology-enabled 3PL?

The term "technology-enabled" implies that these 3PL providers utilize various digital tools, software, and the latest hardware technologies to improve their logistic services' efficiency, visibility, and overall performance. According to a 3PL study, 94% of 3PLs and 87% of shippers think technology adoption is critical to their company's success.

In short, a technology-enabled 3PL logistics service provider leverages advanced technologies to enhance and optimize its supply chain and logistics operations. 

Software technologies

The technology factor in these 3PLs can be broken down into software and hardware. Software technology enablement begins by having a Warehouse Management System (WMS) in place that helps manage inventory efficiently, from storage to movement of products, accurate and fast order fulfillment, etc. 

Let's accept it: 3PL operations have become more complex and sophisticated over the years. For example, a 3PL, while catering to multiple clients, must be able to dynamically accommodate the needs of each client since it will deal with products of different categories, sizes, and types – and that is why a simple WMS does not cut it anymore. With increasing complexity and growth in the logistics world, 3PLs need an intelligence and optimization layer on top of the WMS that will help make the operations more efficient and accurate and will offer them a high degree of control and visibility. 

Hardware technologies

Hardware technologies encompass basic technologies like barcodes and QR scanners, which serve as foundational tools for record-keeping in logistics. They track inventory movements, providing a simple way to document activities. Even essential tools like weighing scales ensure accuracy in freight, shipping, and even storage. 

As complexity grows, intermediate technologies such as sortation belts, pick-to-light systems, and voice picking enhance warehouse operations. Autonomous mobile robots, conveyor belts, AGVs, and picking robots are deployed for advanced logistics, maximizing efficiency and accuracy. Ultimately, these technologies optimize resource utilization and enhance client experiences by ensuring precision and efficiency in logistics operations.

AMRs and picking robots - commonly used robotics in large and high-volume warehouses

Advantages of being a tech-enabled 3PL 

Here are some of the major advantages of being a tech-enabled 3PL in the supply chain and logistics world:

Operational efficiency and accuracy

3PL Automation of routine tasks, such as order processing, inventory management, and route optimization, leads to increased operational efficiency. This accelerates processes and allows for faster order fulfillment

Additionally, technology comes with built-in checks and balances that can increase the efficiency and accuracy of your operations. For example, when the software and hardware tech work together in tandem, it gives rise to efficient error-finding mechanisms, reducing the likelihood of mistakes and enhancing the overall accuracy of logistics operations.

Client expectations

The e-commerce and 3PL warehouse management system landscape is now more competitive than ever. Many 3PLs are now heading towards digital transformation based on client expectations. Clients have now realized that in order to be more competitive and efficient, it's important to collaborate with the right tech-enabled 3PL. 

A key advantage of 3PL is that technology-enabled 3PLs meet client expectations by offering data-driven insights, leveraging analytics tools to inform decision-making and enhance overall supply chain performance. Moreover, improved visibility, accuracy, and timely delivery contribute to a positive customer experience. 

Enhanced client visibility

Logistics processes can be manual, cumbersome, and prone to reconciliation challenges without the right technology. Technology provides clients with a comprehensive view of their logistics operations. With the right technology, clients benefit from real-time visibility into inventory, order fulfillment, and billing data. This transparency is crucial for making critical business decisions promptly.

Fully integrated approach

Technology facilitates an integrated approach where multiple services are interconnected. This ensures seamless coordination between various functions such as order management, accounting, fulfillment, sourcing, and others.

With fully integrated WMS functions such as order management, accounting, fulfillment, and sourcing, they seamlessly work together. When a customer places an order, the system not only updates inventory and initiates fulfillment but also automatically manages accounting entries, streamlining the entire process for a more efficient and error-free workflow.

A powerful 3PL software integrates all necessary services to offer an integrated approach.

Save time

Tech-enabled 3PLs help clients save time, which translates to potential revenue. Here's an example of how modern fulfillment software works: 

  • The fulfillment software seamlessly integrates with online storefronts, eliminating the need for sellers to manually send orders to a 3PL daily. 
  • Next, sellers can easily track every order's status through real-time documentation, from picking to shipping. The software also automates reordering inventory, checking product levels, and handling returns, saving time and expediting customer deliveries. 
  • This comprehensive integration enhances supply chain visibility and enables efficient inventory and sales management for sellers.

How to implement the right technology for your 3PL? 

Implementing the right technology is crucial for optimizing Third-Party Logistics (3PL) operations. Here are key criteria businesses must consider for a successful implementation: 

Understand your business and clientele

Before zeroing in on your business's technology, you must conduct a comprehensive analysis of your business, taking into account the nature of your products and services. Understand the unique requirements of your clientele, including any specific needs related to shipping and logistics.

For example, if your 3PL services involve handling perishable goods, prioritize implementing temperature-controlled logistics solutions. If you are a 3PL specializing in international shipments, ensure that your technology supports efficient and compliant label generation.

Warehouse preparation

Evaluate the operational characteristics of your warehouse, considering factors like SKU volume, order types, and the predominant business you will cater to (B2B or B2C). Tailor your warehouse setup to accommodate these specific characteristics. This process will entail implementing location codes for precise inventory tracking, providing comprehensive worker training to enhance efficiency, and establishing clear storage distinctions to optimize workflow in different activity areas, etc. 

Implement warehouse management and fulfillment software

Choose warehouse management and fulfillment software that aligns with the unique requirements of your 3PL business. Ensure that the software is equipped to handle the nature of the products you deal with and supports the overall logistics workflow. Also, look for software solutions that offer customization options, allowing you to tailor processes to your specific needs.

Procure and deploy the right hardware

Evaluate the scale and complexity of your logistics operations to determine the appropriate hardware solutions. Consider factors like the volume of transactions and the need for real-time data processing. Additionally, procure hardware that integrates seamlessly with your chosen software. Finally, conduct thorough integration testing to verify that hardware components, such as scanners, effectively feed data into the system and support a reliable two-way data transfer.

Inspection and verification 

Perform a detailed inspection of the deployed hardware to validate its functionality. Verify that the hardware components work in tandem with software systems, ensuring a smooth flow of information without disruptions.

Establish a system for ongoing monitoring and verification to promptly address any potential hardware issues. Regularly assess the performance of integrated systems to maintain operational efficiency.

Insights and improvement

Implement robust monitoring systems to extract data-driven insights from your logistics operations. Analyze the data to identify trends, areas for improvement, and potential operational bottlenecks.

Also, use insights derived from data analysis to improve accuracy and efficiency. Regularly revisit and optimize processes based on performance metrics. Ensure your 3PL services consistently meet or exceed agreed-upon Service Level Agreements (SLAs).

Bottomline 

Embracing technology is not just a choice but a necessity for Third-Party Logistics (3PL) providers in today's dynamic landscape. The demand for advanced technology is growing, and being a tech-enabled 3PL is essential for growth and scalability. 

Staying ahead in the logistics game requires understanding the intricacies of software and hardware technologies and leveraging them to enhance operational efficiency, meet client expectations, provide visibility, and ultimately save time for both 3PLs and their clients. 

How can Hopstack accelerate digital transformation for your 3PL?

Hopstack revolutionizes the 3PL industry by offering a holistic warehouse management and fulfillment solution. From seamless client onboarding to efficient 3PL billing and performance analytics, Hopstack empowers Third-Party Logistics (3PL) providers to become future-ready. Leveraging the robust features of the Hopstack platform, 3PLs can boost their scalability and productivity, optimizing resource utilization in the rapidly changing fulfillment landscape.

Hopstack, for its 3PL customers, has previously helped attain 99.2% order accuracy and helped grow more than 100% in fulfillment volume. Schedule a call with our product specialist today to unlock enhanced efficiency and easily navigate modern logistics complexities.

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