Warehousing is changing as the supply chain becomes more distributed and flexible. Specialized service providers prove helpful in the effort, but can add layers to the route that products take from manufacturer to consumer.
Because these third-party logistics providers (3PLs) specialize in operations that are typically not core competencies of their customers, they frequently offer services at costs that are compelling. Still, not every 3PL delivers the same services, and when one of the missing pieces is real-time data about your shipments, the advantages of those lower costs can disappear quickly.
The main problem lies with 3PLs that have not deployed fully integrated software systems and rely on manual processes, disconnected applications, and immature data handling. Any particular 3PL may have a great warehouse management system and even a spectacular transportation management system in place. But having advanced applications that manage individual aspects of an operation can leave data gaps that need to be handled manually. And without direct and instantaneous updates, information can get old before there's time to act on it.
With the increasing emphasis on supply chain visibility, anything that limits access to the status of your orders puts the company at a competitive disadvantage. A delay of a few minutes may not seem insurmountable, but that short time can easily turn into hours or even days when left to manual processes. And updates delivered using spreadsheets or other detached tools make the situation even more difficult. These updates can become outdated as soon as they are created.
Certainty of time and date of delivery is increasingly critical as companies of all kinds reduce or eliminate their warehouse operations. Manufacturers that rely on just in time (JIT) delivery to meet production schedules can be caught off guard when unannounced delays hold back product assemblies. And retailers that keep all stock on the sales floor can face out-of-stock conditions when an unforeseen delay affects their inbound shipments. Perishable goods like groceries are at even greater risk when out of stock becomes out of date and results in spoiled products.
The solution to keeping data flowing and up to date, and thus keeping shipments on track, is automation. That may seem like an obvious statement in this age of cloud computing where it seems all kinds of data are available at any time and accessible from anywhere. However, smaller operations may not have made the investments necessary to fully automate their processes and provide viable ways to make that information available as needed.
The process of choosing a 3PL should include reviews of their capabilities that go beyond their basic logistics capabilities and include the technologies they use to manage their operations. Look at their capacities for real-time updates, integrated application suites, and their overall technology platform. Look for easy access to their processes dashboards that let you view specific shipments and schedules. Finally, find out what kind of proactive alerts they deliver that let you know about problems, or even potential issues before they become disasters. Without these capabilities, your 3PL cannot provide the best value to your organization.