Date: May 31, 2018
The 3PL warehousing industry is being transformed by an unprecedented wave of technological innovation. Many of these breakthroughs are primed to provide benefits, levels beyond what we have ever seen before for warehouses and their customers. However, not all technologies are created equal for the 3PL warehouse.
Before diving in, it is important to understand the basic concepts of emerging warehouse technologies– and how they may ultimately help your 3PL prosper and grow. It has been our experience that once a technology is proven to have significant value, it will spread through our industry like wildfire.
As the third-party logistics industry continues to expand, it is important to be aware of what innovations are on the rise. So, we set out to provide an overview of several of the new technologies being introduced, how they benefit 3PL warehouses, and offer useful knowledge to help your long-term planning.
Blockchain technology is used to create a non-centralized database containing encrypted records of digital data or events (i.e., “blocks”) that are tamper-resistant. These blocks can then be connected to other such blocks to form a “chain.” Hence, the “blockchain.” While others may be allowed to review the blocks, they cannot change or delete them without impacting the other blocks connected on the chain.1
Given its ability to provide total transparency, security, traceability and scalability, blockchain technology has been described as a game changer that could become the universal language of the supply chain industry.2 Ultimately, the technology could help 3PLs slash costs, reduce paperwork, bypass middlemen, reduce their regulatory burdens, accelerate payments and simplify claims settlements.3 While the technology isn’t widely deployed yet, it is one 3PLs should definitely keep an eye on in the future.
Artificial intelligence refers to any computer system that mimics human intelligence in areas like translation, speech recognition and decision making without the need for much human interaction.4
AI’s many benefits include “Machine Learning,” which can do things like recognize patterns that can be used to improve demand forecast accuracy by more than 20%.4 Another is its highly accurate “Speech Recognition” capabilities, which can reduce picking errors by up to 90%.5 AI will also enable 3PLs to process, understand and react in real-time to the volumes of Big Data flowing through their warehouses.
At present, AI is still not widely deployed in our industry – especially in smaller 3PL warehouses. But this will likely change in the future, given the many benefits it can provide for larger players.
Augmented Reality is a technology which superimposes additional layers of digital information into the user’s immediate environment. These digital layers effectively augment and enhance the user’s reality and are observable through the use of smartphones, tablets and other devices.6
AR has already been tested by a number of large firms, most notably DHL, who conducted a pilot program in their distribution facilities.7 Although the expense may be beyond the reach of the average 3PL today, AR’s ability to dramatically increase productivity, improve safety, repair equipment and enhance speed and accuracy will likely make it an attractive technology to consider in the near future.8
The Internet of Things refers to billions of physical devices around the world that are now connected to the internet, collecting and sharing data. Thanks to cheap processors and wireless networks, it's possible to turn anything, from a pill to an airplane, into part of the IoT. This adds a level of digital intelligence to devices that would be otherwise dumb, enabling them to communicate without a human being involved, and merging the digital and physical worlds.9
The ability to track the sensors embedded in every SKU will enable 3PLs to create a truly “smart” warehouse. In fact, some warehouses are already experimenting with IoT technology, including UPS and the athletic sportswear company Lids.10 The average 3PL could eventually reap enormous benefits from the IoT, including greater visibility, faster production, decreases in costs – and happier customers.
Robotic fulfillment vehicles can be either an Automated Guided Vehicles (AGV) or simply a Mobile Robot. Both are devices that can move autonomously to help a warehouse fulfill orders.11
Robotic Fulfillment Vehicles are already being used by such huge players as Amazon, who currently uses 45,000 of these vehicles in its warehouses12 – and Chinese eCommerce giant Alibaba, who runs a fulfillment center where robots do 70% of the work.13 Given the cost and time savings – and on-going shortage of qualified warehouse workers – their introduction may not be far off for the average 3PL warehouse.
MHE are warehousing devices that can communicate with other pieces of warehouse equipment, as well as with SKUs with embedded sensors. These machines will become more and more prevalent as the “Industrial Internet of Things” becomes more widespread.
Smart Material Handling Equipment can be everything from automated picking devices to robotic fulfillment vehicles to Smart Conveyor Systems. Their ability to communicate with SKUs, other machines, your WMS and even your workforce will enable your 3PL to increase its speed, efficiency, safety, connectivity, cybersecurity and profitability.14
FIFO systems are specially designed “pushback” warehouse racking configurations which are perfect for 3PLs who handle goods with critical expiration dates. These would include fresh or frozen foods or medical supplies.15
Deploying such systems would clearly help 3PLs keep their customers satisfied and their most perishable products flowing out the door. FIFO systems also help double or triple your storage capacity, reduce inventory gluts and lower the expense of reverse logistics.16
LIFO storage systems, or Gravity Flow, are specially designed configurations that enable 3PLs to maximize their internal space. LIFO systems work best for warehouses who do not deal with goods that have critical expiration dates.
LIFO systems can increase fulfillment speed and reduce damage to goods, as they can be stored away from the daily operations. They also facilitate high storage density, which enables a 3PL to maximize its overall return on its facility investment.17
Both FIFO and LIFO Storage Systems are also attractive because, unlike many of the other technologies mentioned above, they do not require a total overhaul of your warehouse – or a massive amount of investment. Both have also been deployed widely around the warehousing industry, which means they already have a solid track record. While they may not yield as high an investment return as some of the new technologies listed above in the long run, they do tend to return the initial investment faster.
We hope you find this information to be useful to your 3PL’s long-term planning and education. For more information on companies who are providing innovative fulfillment services, download a full copy of our 2018 State of the Third-Party Logistics Industry Report.
Who We Are
3PL Central provides cloud-based WMS solutions for 3PLs so they can transform paper-based, error-prone businesses into service leaders focused on customer satisfaction, efficient operations, and growth.