Logistics providers are better positioned to test and integrate emerging technologies
Many shippers recognize the value of deploying technology to digitalize their supply chains. Robotics, artificial intelligence, data analytics, and sensors are some of the technologies disrupting traditional supply chains, and having the potential to create a new automated and efficient supply-chain paradigm. At the same time, new technology is developing so quickly that businesses are challenged to keep up with innovations and best practices.
A rcent report from DHL showed that over 75% of businesses recognize the potential cost reduction benefits of information technologies, 71% of companies consider transportation to be a strategic component of their business, and 63% believe that big data, artificial intelligence, and other technologies could enable smarter transportation operations. At the same time, fully 95% are not fully exploiting that potential.
Shippers are increasingly relying on third-party logistics providers to provide the benefits of technology implementation in their supply chains. The reason is simple—they don’t have the resources to investigate and experiment with emerging technologies.
“It would be hard for shippers to do that,” said Jason Gillespie, director of Continuous Improvement at DHL Supply Chain, North America. “We’ve worked with customers that adopted some of these technologies before partnering with us. Lots of times they don’t know what success looks like. They didn’t know how to integrate these technologies with their own systems. We can do better on their behalf.”
Fast Consumer Deliveries
The trend toward fast consumer deliveries has had an impact on technology development and on the role 3PLs can play in helping shippers. “There are tons of companies coming out with different types of technology,” said Phil Schmidbauer, director of engineering solutions at ODW, a 3PL that serves the personal care, food and beverage, consumer goods, and industrial sectors. “Many of them are startups building tools to make consumer deliveries faster better cheaper.”
Technologies that allow for today’s same-day and overnight deliveries include warehouse systems that slash times for order processing and transportation management systems that optimize transportation modes and routes. In some warehouses, robotics and automation mean that consumer orders are barely touched by humans as they make their way from shelves to trucks.
“3PLs are helping customers get to this point by providing access to technology,” said Schmidbauer. “Smaller shippers usually can’t leverage the latest technologies so they use 3PLs to integrate it for them. A lot of work goes into sharing information and making sure it is clean and accurate.”
DHL increasingly sees its role as normalizing and experimenting with emerging technologies for the benefit of customers. “They can leverage our ability to scale,” said Gillespie. “They don’t have to invest in costly transportation management systems because they get that with us.”
DHL Supply Chain, the Americas recently announced new partnerships with two such emerging technology companies—Convoy and Turvo. Both integrate with MySupplyChain—DHL’s proprietary end-to-end visibility and business intelligence solution.
DHL Supply Chain is the first 3PL to partner with Convoy, a nationwide digital freight network that helps move millions of truckloads by connecting trucking companies with shippers. DHL has integrated Convoy’s network of carriers directly into its supply chain application providing shippers access to Convoy’s automated real-time pricing and increased capacity.
“Convoy provides a digital connection to the small carrier community,” said Gillespie. “The old way was to go to load boards or to pick up the phone and dial for trucks. Your ten favorite carriers might fall through and you don’t know about the five-thousand others out there.”
Convoy uses a crowdsourcing application that speeds up communications between shippers and carriers and uses machine learning to predict what rates should be, making them more predictable. “It means sleeping better at night knowing you have more available capacity,” said Gillespie.
Turvo addresses the challenge of how to get all supply-chain stakeholders to talk to one another while all see the same information. The real-time collaborative logistics platform allows all parties to a shipment to view and take action on the same information at the same time, increasing visibility and collaboration across the lifecycle of a shipment. “Like blockchain technology, Turvo allows everyone in the supply chain to see the same source of truth,” said Gillespie.
Tech Partnerships
Technology partnerships with 3PLs have a big impact on shippers’ business processes and supply chains. “It takes lots of touch points out of the real day-to-day work of logistics,” said Gillespie. “Dialing for trucks is one example. Technology makes process simpler and less manual, and drives greater visibility.”
“Automation eliminates a lot of document handling requirements,” added Schmidbauer. “Sometimes shippers need to change the process for taking orders. Freight invoice accounting is also improved.”
ODW’s approach is to examine their customers’ entire value stream. For example, “Different shippers require different levels of visibility,” Schmidbauer explained. “Some don’t want or need the highest level. They have to consider it from a cost/benefit perspective. We look at a wide range of technologies and help customers optimize their supply chains.”
ODW generally leverages outside technologies on behalf of customers, including FourKites, a provider of multimodal supply chain visibility solutions and deploys application programming interfaces (APIs) to transfer data from one application to another. The company also uses business intelligence software to help customers design and optimize networks.
A recent report from Accenture estimated that a pharmaceutical manufacturer with $10 billion in annual sales would save $387 million in its manufacturing and supply processes with the end-to-end capabilities of a digital supply network. According to McKinsey research, companies that aggressively digitalize their supply chains can expect to boost annual earnings growth by 3.2% and annual revenue growth by 2.3%.
Given those numbers, it’s no wonder that shippers are increasingly partnering with 3PLs to enhance their logistics technology deployments. It is vital for companies to digitalize processes to meet an ever-increasing demand to drive efficiency and flexibility and improve the customer experience.
It also shouldn’t come as a surprise that 3PLs like DHL see their investments in supply-chain technology as a big opportunity for them.
