Living in an unprecedented time like this brings forth constant changes in lifestyle as well as conducting business. At such times, businesses are forced to think out of the box and look for new solutions in different places outside the company.
Third-party logistics service providers (3PL) in this era of the pandemic are showcasing their preparedness and emerging as a saviour for businesses: meeting their changing and growing demands while allowing them to focus more on their core competencies.
A 3PL service provider is no more just another company that you have assigned and entrusted to handle a part of your business- it is much more. “The role of 3PLs has changed from a service provider to a partner of growth,” shares Vivek Juneja, Founder & MD, Varuna Group.
As 3PL service providers have transitioned from service providers to growth partners, they are expected to come up with new logistics capabilities and complex solutions to successfully manage supply chain processes, bring down conventional logistics costs and handle more complicated tasks.
They are not only looking to handle the client’s fulfilment but are also associated with them for longer terms focusing on driving sales, leading business enhancement, and increasing productions and profits. “We have partnered with a long-term perspective and have more than 40% clients with us for more than 5 years,” Mr Juneja informs.
All the functions from warehousing the product or its components to packing the order, labelling the order for shipment, shipping it with the help of couriers or delivery services, pushing order updates to notify customers, and managing customer return are now taken care of by 3PL providers.
Going forward, the industry is expected to do all of this and much more. And, to facilitate the same, the 3PL provider will have to change the way they operate and conduct their business and adapt to the emerging trends.
Trends further reshaping the 3PL Industry
As per a report, the Indian 3PL market is expected to register a growth rate of over 11.5% during the forecast period of 2020-2025, owing to the growth in manufacturing, FMCG, retail, and e-commerce sector.
This growing landscape of the 3PL service providers and the growing demand of businesses will demand reshaping and enhancement of 3PL services. The key trends that are expected to reshape the 3PL industry and make them future-ready are the expanding role of digitisation in processes, more collaborations and environmentally responsible processes.
Digitisation of the process:
More and more Third-party logistics providers will be digitising their processes to meet the growing business requirements. In the future, 3PL providers will “need to focus on decreasing dependability on manpower by ramping up their automation efforts and increase visibility by investing in digitisation,” shares Mr Juneja.
Technologies like Real-time freight tracking, the Internet of Things (IoT), Artificial Intelligence (AI), Machine Learning (ML), and Blockchain will dominate the industry and enhance operational efficiency and visibility in the processes.
3PL providers will be seen leveraging Big Data to manage their vast datasets, thus leaving the paper records of shipments as a thing of the past.
These technological investments and digitisation of processes will be encouraged by “the deep penetration of smartphone use in India,” and help 3PL providers yield efficiency in their processes while also bring down their operational cost while saving time.
In this pandemic era, we witnessed an emergence of a new trend of collaboration. Many 3PL providers collaborated with their supply chain enterprises and tech companies for efficient warehousing, packaging, shipping, and last-mile distribution.
Moving forward, 3PL companies will leverage technology to collaborate, connect, and engage with customers and will use electronic data to streamline their operations and introduce flexibility. “This will enable scalability which is the key to maintaining uninterrupted operations in the current situation,” said Mr Juneja.
Such collaborations made by leveraging technology will maintain transparency and ensure a more efficient working model as both shippers and 3PL companies will be able to function independently without relying on possibly faulty information exchange.
Environmentally responsible processes:
Understanding their social responsibility towards the environment, 3PL companies will now look at more environmentally responsible ways of doing business and adapt to green logistics, leaving behind the traditional systems which contribute majorly to carbon emissions and the disposal of toxic and hazardous waste materials.
For instance, Varuna Group has already commenced reshaping its processes and undertook robust technology advancement and adoption and inculcated a dedicated quality assurance and compliance department.
Many service providers are, in fact, implementing such initiatives and reducing energy consumption in transportation and decreasing waste production by going digital, reusing and recycling durable packaging materials.