Third-party logistics is projected to reach $1.3 trillion by 2026. According to this projection, digital transformation is no longer an option for 3PLs but a strategic decision that will move their growth trajectory in the right direction.

eCommerce is a consumer-driven market. Here, a business’s growth is directly proportional to consumer loyalty, which reciprocates with smoothness and transparency in order fulfillment until the last-mile delivery. For transparency and real-time information exchange, eCommerce requires supply chain digitization and visibility in logistics.

The evolving landscape of eCommerce has triggered an unprecedented increase in online shoppers. To meet the escalation in demand, businesses resort to 3PL services for quick, on-time, and safe delivery. To fulfill clients’ requirements, third-party logistics providers must have a robust system that can give updated data in real-time, ensure accuracy, and show rerouting alternatives whenever necessary.

Adoption of advanced technology by 3PLs gives them an advantage of real-time visibility through cloud-based logistics that can be remotely monitored, has cost-effective last-mile delivery strategies, and has efficient management of operations. Let’s delve a little further and explore how digitizing 3PLs enhances e-commerce and makes it more customer-centric.

Advantages of Digitizing 3PL Operations

• 1. Improves Communication with Clients: IoT in supply chains allows integration of entire supply chain operations. Integration makes it transparent and provides real-time visibility on progress in order fulfillment along with a cue on market demands. Transparency enhances communication, brings accuracy to critical information, and shares analytical data that is significant for decision-making.
• 2. Improved Security: Blockchain Technology enhances security. Data is more integrity, and penetration or tampering with it is not easy. It also protects data from getting lost and any physical damage.
• 3. Saves Cost: The e-commerce industry benefits from outsourcing to a 3PL provider, which brings down costs. By leveraging logistics and supply chain operations to a professional 3PL, businesses can save considerably. Operations that require big investments, such as warehousing, shipping and transportation, and other logistics operations, can be outsourced.
• 4. Flexibility: Automation in 3PLs allows for upgrades or downgrades as needed. In addition, GPS and real-time connectivity with drivers allow for efficient route plans.
• 5. Faster Delivery: Cloud-based logistics offers the advantage of ease of access to information. Third-party logistics providers are experts in shipping, transportation, and last-mile delivery, helping with faster and safer delivery.
• 6. Warehouse Automation: A 3PL provider can offer end-to-end warehouse management services with warehouse digitization. When comprehensive and detailed service is provided, from procuring goods from the warehouse to shipping to dropping them off at the customer’s nearest location, retailers feel less burdened and willingly connect with third-party logistics vendors.
• 7. Route Optimization: 3PLs are market experts in offering shipping services. GPS helps them find the best routes in case of disturbances and create an agile supply chain.

Challenges in Digitizing 3PL Operations

• 1. Purpose of Digitizing: The clarity and purpose of digitizing 3PL operations should be obvious. 3PLs deal with numerous supply chain partners, and there is a huge exchange of information to facilitate flawless order fulfillment.
• 2. Finding an Efficient Technology Partner: Software selection should be done judiciously, as third-party logistics companies require error-free automated order fulfillment systems for multiple supply chain providers. Robustness in integration is mandatory to ensure an agile supply chain. Interoperability can be an issue if the system’s syncing has not been done properly.
• 3. Data Quality: Since 3PLs handle data related to orders, warehouses, inventory management, transportation, shipping, and delivery, they need an advanced system that can work independently with less manual support. This ensures data quality that is more often used for decision-making and automated order fulfillment is error-free and accurate.
• 4. Visibility and Real-Time Tracking: Smart logistics is all about how efficient the system is in providing visibility and real-time tracking to ensure regular communication on orders.
• 5. Security: Third-party logistics providers are responsible for several retailers. Security cannot be breached, and sensitive information must be handled sensitively.

Tips on Embarking on a Digital Transformation Journey

• Automation: For smart logistics, automation and system integration are mandatory. A cloud-based automated system can be remotely monitored, and services can be aligned for an agile supply chain.
• Robotics in Logistics: Introducing robotics in logistics helps with smart warehouse management. Each can be programmed to handle multiple tasks, and they will be completed without efficiency and accuracy. Robots can sort, pack, move, and reorganize items according to demand, simplifying a lot of work.
• Ensure Visibility: 3PL providers need an agile supply chain to ensure end-to-end visibility in logistics handling. This enhances trust and loyalty.
• Sustainable Logistics: E-commerce is viewed as a major contributor to pollution, wastage, and a high carbon footprint. 3PL providers are viewed as supporters of sustainable logistics as they cater to several retailers. E-commerce fulfillment becomes sustainable and eco-friendly as orders can be clubbed for different retailers, or through automated order fulfillment, prompts about other products that can go with one item can be shared with customers.
• Predictive Analytics: With an automated system, third-party logistics can share analytical data, which is accurate and can be used for predictive forecasting about demand and customer interest.