The Future of 3PL Logistics: how far we have come and where will we go?
February 06, 2020
Growing up, the year 2020 seemed futuristic…in a flying-cars-and-hoverboards kind of way. Unfortunately, I don’t step into my time traveling DeLorean to drive to work each day, and I have recently been wondering, “has the future arrived?” The transportation methods of my dreams are still being engineered, but is the same true of other futuristic engineering feats? Looking at other industries, is it possible that some of the inventions we envisioned back then have already arrived? For example, in the world of logistics – my industry – what does the landscape look like today compared to how we imagined it would?
Not so long ago, in a galaxy not so far awayIf you’d asked an expert a decade or two ago how they thought supply chains would have transformed by now, they might have imagined unmanned mobile robots in warehouses, drones for online fulfilment, artificial intelligence, the integration of block-chain within the logistics ecosystem, and everything IoT. The future held the promise of near complete autonomy. Robots would perform repetitive processes, learn more complex ones, and efficiency would be through the roof. All of this would be dependent on data – and this is where AI and IoT would come into play. We’d be able to collect, interpret and act on data! AI algorithms and an IoT connected network would enable ‘anticipatory shipping,’ and predictive models combined with robotics and autonomous fleets could lead to zero fulfillment time! Direct-to-consumer ecommerce retailers would be able to offer buyers the same instant gratification as traditional brick-and-mortar retailers! In summary, logistics and 3PL providers would be capable of giving consumers what they wanted as soon as they wanted it (or retailers before they realized it was time to restock a product). Blockchain was also expected to have more of an influence on supply-chain compared to other supplier management tools. Through blockchain, tracking details from order initiation to shipment would be possible and the increased visibility would provide stakeholders with access to real-time information whenever they wanted it.
Where we are todayUnfortunately, many of the above dreams are still being manufactured (much like my flying car and hoverboard). However, this does not mean that the logistics industry has been stagnant. On the contrary, major advances in robotics, algorithms, autonomous and semi-autonomous transportation and drones have propelled the industry forward. Today, many warehouses increase workers’ efficiency with the pick, pack and ship process, contributing to higher throughput. Data has enabled suppliers to predict demand and prepare for it more accurately, and predicative shipment models where customers can get what they want almost immediately are advancing. Shipments that used to take days or weeks to arrive are now being delivered faster with the reality of same-day and even 2-hour delivery. There are even drones being piloted for last-mile delivery and semi-autonomous vehicles being used to transport goods. From packaging and labeling to shipment, transportation and even last-mile delivery, new technology has strengthened capabilities in just about every aspect of the logistics industry. And yet, the era of smarter and faster performance has just begun. Globally the industry is poised for massive growth and is expected to reach $12.25 billion by 2022, according to Allied Market Research.
An updated vision of the futureAs we enter a new decade, there are a number of trends that we believe will shape the future of logistics in 2020 and beyond (and I believe them to be more realistic than a flying car). Here’s what to look for as the industry progresses. AI & Technology: The role of AI in logistics will grow. From improving speed to enhancing supply chain productivity and reducing operating costs through innovations in geocoding, route optimization, demand prediction, machine learning algorithms and warehouse automation, AI packs a ton of potential. As cross-border trading increases and ecommerce continues to grow, existing tracking systems will struggle to monitor goods as they move through the supply chain, but technologies that enable active tracking devices, sensors, real-time tracking software and location-based intelligence will improve blind spots and introduce better visibility within the supply chain. Digital Twins: A digital twin is a virtual replica of a real-world business function. With the help of a digital twin, 3PL enterprises and suppliers can plan delivery routes efficiently and even prepare for problems before they occur. Digital twins can also help speed up operations and plan future activities by testing new models and streamlining logistics operations accurately and with minimal waste. Collaboration: Entrepeneur.com estimates that globally, more than 40 percent of shipments are completed same-day, compared to less than 5 percent just four years ago. Convenience has always been king, and the demand for time-defined deliveries and trackable shipments is pushing suppliers to partner with 3PL service providers and start-ups to enable efficiency and visibility in areas of warehousing, packaging, shipping and last-mile distribution. Greener Logistics: Traditional logistics and transportation are not often friendly to the environment, and recent years have seen consumers invest more in companies and brands that use sustainable practices. Toward that end, suppliers and 3PLs will likely adopt more environmentally responsible and sustainable processes to minimize the impact of their operations. (Green initiatives will also benefit from the above mentioned developments in technology.) All in all, technology will continue to influence supply chains, the landscape of logistics and how goods travel, just as it has influenced almost every aspect of our lives today. Maybe one day, it will even produce that hovercraft I’ve been waiting for.
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Hesham MubarakHesham is a Marketing Associate at IMCLS Canada. He comes with experience coordinating and building marketing campaigns for companies such as Monarch House, HSBC, Dyson, P&G, GSK, University of New Brunswick and York University. He also brings a background in logistics (Livingston International), production and creative development. He is passionate about marketing and helping businesses succeed through appropriate and effective communications/advertising programs. He is also a big gear-head and when he is not helping businesses with their marketing needs he likes to cook and BBQ.
Hesham Mubarak 2020-02-06