5 Predictions for The Future of Third Party Logistics in 2020
The third party logistics (3PL) landscape has altered significantly in the last decade and is tipped to experience further growth and change as mobile technologies and ‘smart’ working practices develop. With growth in third party logistics markets forecast to be as high as 15 percent, the demand to service these markets in 2020 will generate fierce competition.
A greater consumer demand for 24/7 services and reduced costs means efficiency and accuracy will be crucial for the future of a successful 3PL providers. Businesses will remain focused on the goal to drive down their own operational and labor costs by outsourcing logistics to 3PLs but success will hinge on their willingness and ability to adopt new technologies.
The following are the first 5 predictions we will see in the next 7 years which will be common among most third party logistics companies and trends and practices shippers and supply chain managers should come to expect from their providers.
1. More Collaboration Between Shippers and Third Party Logistics Companies
Third party logistics companies will rely heavily on technology to collaborate, connect, and engage with customers. Electronic data exchange will be critical, not only for the performance and integrity of the data, but the flexibility and speed of change. Vendor managed inventory, where the supply chain vendor monitors the buyers inventory and makes periodic resupply decisions, will be common in even the smallest 3PL via web-based portals and access to the systems of the 3PL.
2. The Rise of Mobile Applications
Paper records in warehouses will be a distant memory, and everything in 2020 will be focused around agility through mobility. Mobile devices will be commonplace and used right across the board at all third party logistics firms. With the potential for RFID enabled devices to hold data so that the items carry information with them, for example. product and providence for identification and traceability. Customers will be able to order and process freight shipments anytime, anywhere, 24/7.
3. Smarter and More Dedicated Technology from Third Party Logistics
Third party logistics providers will see the benefits of investing in smarter IT and software systems which can deliver rapid ROI. Software, such as Transportation Management Systems (TMS), will drive cost and time saving, decreasing inefficiencies. Voice prompts and commands will be standard in the supply chain process, such as stock inquiries or freight tracking. Improved speech recognition software will also allow workers to communicate directly with their Warehouse Management System (WMS) to improve stock recording, speed up order turn-rounds and shorten staff training periods.
4. The Harnessing of Big Data and Information Sharing
Cloud-based technology will be used by the majority of third party logistics companies as they embrace the new age of ‘Big Data’. 3PLs will recognize the need to allow clients access to their own systems to improve efficiency in areas linked to seasonal trends and the demands of flexible operations. Shared data will also allow the traceability of an item in the supply chain.
5. The Globalization of the Economy
In 2020 the world economy will be more integrated and 3PLs will be expected to work on a larger scale with a distinctly global outlook. Distribution will expand globally with more opportunities opening up in other parts of the world creating an even more complex supply chain, varying costs, increased process and therefore an increase in expert third party logistics.
The 3PL industry will face many challenges in the future, but by 2020 the sector will have grown dramatically, largely down to the massive expansion of emerging global markets. This change will happen swiftly as we see more and more mergers & acquisitions over the coming 7 years in the third party logistics world, as well as more standardization in the expectations of shippers and supply chain managers.
What trends do you think we will see in 2020?