3PL Warehousing Pro-Tip: Embrace the Big Data Era

Date: May 15, 2018


Four Questions You Need to Answer Before Your 3PL Can Benefit from the "Big Data Era"

From your Warehouse Management Software (WMS) to your EDI connections to your integrations with eCommerce engines, Transportation Management System (TMS) and more, your 3PL warehouse now produces more data than ever before. At one time, and not that long ago, this information wasn’t considered viable to day-to-day business decisions and operations for many warehouses. Today, however, this information could hold the key to happier customers, stronger partnerships, and higher profitability for many in the supply chain and logistics industry.

In our 2018 State of the Third-Party Logistics Industry, we recently discussed how 3PL warehouses can embrace Big Data to help provide a superior customer experience. But in order to do so, 3PLs must first understand what Big Data actually is, how it can be analyzed, and how warehouses can use it for their benefit. Let’s start with a definition.

What Exactly Is Big Data?


According to Gartner, Big Data is defined as follows:

"Big data is high-volume, high-velocity and/or high-variety information assets that demand cost-effective, innovative forms of information processing that enable enhanced insight, decision making, and process automation."1

Recently, veracity has made its way into this definition as well2
Simply put, big data is data that contains the four Vs that can help address business challenges that in turn help drive growth and market opportunities.

Four V's of Big Data

How Is Big Data Helping Supply Chain Firms Today?

It should come as no surprise that some of the leading companies in the logistics industry have been using Big Data to increase their sales, boost their profits and provide a superior customer experience for years. This includes:

Amazon – leverages user information to optimize their supply chain3, make fashion recommendations4– and even anticipate what products they are going to ship to certain customers – before those customers even know they’re going to order them.5

Wal*Mart – uses Big Data to make their pharmacies more efficient, improve the speed of their check-out lines,  and even optimize their product assortment6.

UPS – uses location data to create software that has increased delivery speed, reduced accidents, boosted profits and saved more than 10 million gallons of fuel by simply eliminating almost all of their drivers’ left turns 7.

How Can Big Data Help Your 3PL Warehouse?

There’s no question that your 3PL’s data can help you address a host of business problems you’ve never been able to tackle before, as well.  Once gathered, it will enable your warehouse to perform the following three critical operations:

      1. Cost and Efficiency Analyses – In this case, your 3PL would analyze the data you have produced in an effort to understand and learn from what has happened inside your warehouse in the past.  This is also known as a form of Business Intelligence, or BI.

        An analysis of your past data can provide a host of actionable insights that will help you improve your operational performance in the future.  It can show you where your warehouse is making or losing the most money, which services are most profitable, and even which customers you should let go and which ones to keep.

      2. Predictive Analytic Forecasting – Analyzing data your warehouse produced from years ago can offer key insights for your business. This effort will foretell what is likely to happen both inside – and outside – of your warehouse in the future. 

        Predictive analytics works to identify large-scale internal and external patterns and trends. If these remain consistent, they can be used to predict what will happen. This can help your 3PL make long-term strategic decisions – and even spot lucrative new opportunities in our industry before they may become apparent to your competition.

      3. Provide Partners with both Data Warehousing and Insights – In our increasingly connected and transparent supply chains, your partners will expect your 3PL to capture, save, and often deliver analyses of the data you are producing.

        These analyses are already having an impact. According to Supply Chain 24/7 “Savvy, global shippers that capture and analyze transactional transportation management data in collaboration with their third-party service providers have seen hard dollar savings drop to the bottom line8.”  And savvy 3PLs who want to remain preferred partners should start saving and analyzing their data ASAP.
Most important of all, sharing information in the Era of Big Data can help your 3PL work with your supply chain and retail partners to track – and prove – that you are delivering a superior customer experience to consumers at every single touchpoint of their buying journey.View the 3PL State of the Industry Report

How Your 3PL Can Harness the Power of Big Data?

The data your 3PL produces can provide a host of tremendous benefits.  In order to capitalize, your 3PL will need to implement a formal system that will enable your warehouse to capture, identify, and then analyze the precise data you need. To get started, we recommend the following:

  • Begin saving all of your data ASAP - Since you will need both current and historical data for your own purposes, as well as to meet the potential requirements and demands of your customers and supply chain partners, we recommend that you begin capturing and saving all of your data immediately.  You should keep at least two copies of this data, both on and off-site. Ideally, this off-site storage would be in the cloud for portability and accessibility.
  • Establish your own internal priorities – Knowing what you want to measure in advance will help you parse out the data segments you need from the mass of data you produce.  This should be tied to your existing measures of profitability, performance, and other KPIs.
  • Check with your customers and partners to determine their data needs – In today’s interconnected and transparent world, your customers and supply chain partners will soon be relying on your data to help them meet their own needs.  Knowing what those needs are beforehand will ensure that you are tracking, saving, and analyzing all of the correct information. Waiting until they ask could be too late.
  • Start with a baseline – and then begin tracking and analyzing results – Once you have established what data you need to track, you will want to monitor your progress in all of your key areas on a regularly scheduled basis.  This will help determine if your efforts to optimize performance are actually working.
The Era of Big Data will undoubtedly have a major impact on every player in the supply chain world.  But if your 3PL can step up and embrace all that it has to offer, you can position yourself for success for years to come.

Access 3PL Central's 2018 State of the Third-Party Logistics Industry Report

To learn more about the many new opportunities approaching 3PLs today, we invite you to read our 2018 State of the Third-Party Logistics Industry Report.

Want more? Opt for the downloadable version for bonus strategies and tactics you can implement right away to use these trends to your advantage.


Sources

1. https://www.gartner.com/it-glossary/big-data
2. https://www.oracle.com/big-data/guide/what-is-big-data.html
3. https://www.forbes.com/sites/jonmarkman/2017/06/05/amazon-using-ai-big-data-to-accelerate-profits/#2c41ae5e6d55
4. https://www.shoemoney.com/2017/12/07/amazon-uses-big-data-generate-billions/
5. https://www.predictiveanalyticsworld.com/patimes/amazon-knows-what-you-want-before-you-buy-it/3185/
6. https://www.chainstoreage.com/article/five-ways-walmart-uses-big-data/
7. https://theconversation.com/why-ups-drivers-dont-turn-left-and-you-probably-shouldnt-either-71432
8. https://www.supplychain247.com/article/how_to_engage_your_3pls_with_big_data_analytics


3PL Central

Written by 3PL Central

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