Leading companies around the world are increasingly committed to completely digitizing their supply chains. A growing body of evidence indicates that these efforts promote business growth, better process management, and supply chain resilience. According to experts at third-party logistics provider GEODIS in Americas, implementing key digitization and automation technologies is imperative to succeeding in today's environment and ensuring future success.
Technology analysts at Gartner Inc. agree that digitization is critical for companies to remain competitive in the years ahead. But a recent Gartner report also indicates that by 2023, only 50% of large global companies will be using advanced technologies in supply chain operations. That suggests that around half of global companies, and certainly a much larger proportion of smaller firms, won’t be making much progress toward supply chain digitization over the next couple of years. Failure to do so will leave laggards at a competitive disadvantage, lacking the end-to-end supply chain visibility that digitization makes possible.
Visibility is often thought of as the capability that provides managers with the big picture of how materials and products are moving through their systems. That definition is still valid, but the concept of visibility today is taking on more nuance and granularity. Manufacturers, distributors, and retailers are increasingly interested in understanding the nuts and bolts of how logistics works throughout their supply chains. For example, some companies are requiring greater insights into operations within the four walls of third-party supply chain warehouses. By gathering intelligence on how warehouses work, the thinking goes, they will be better able to fine-tune their internal operations. To that end, some companies have gone so far as to deploy robots with cameras to roam around warehouses and transmit images back to headquarters for analysis.
At the same time, these operational details are being integrated into platforms that provide higher-level managers with the broader supply chain performance picture that they crave. While technologies like robotics are facilitating ground-level logistics operations, flexible platforms and artificial intelligence are helping to integrate data into enterprise information systems that derive big-picture predictive and prescriptive, rather than merely descriptive, insights. Third-party logistics providers are at the forefront of developing the technologies and services that enable their customers to achieve end-to-end supply chain visibility, at both enterprise and operational levels.
“Our customers are interested in being more involved inside the four walls of our operations,” says Pal Narayanan, executive vice president and chief information officer at GEODIS in Americas. “They are looking for more collaboration and transparency to fine-tune their supply chains. They want to get to the next level by having better knowledge of what is going on inside the operations of their 3PLs.”
For example, shippers might want to better understand picking, packing, and shipping processes in order to know exactly when to deliver products to the warehouse for timely shipment. A 3PL might give a cargo owner a half-hour window for accepting deliveries, but the shipper might want to narrow that down, for the sake of its own supply chain efficiency, to 10 minutes.
When it comes to the growing e-commerce segment, these same companies want visibility into the process of last-mile deliveries. “Once the package leaves the warehouse,” says Narayanan, “they want to know what’s inside and where it is.”
Inside the warehouse, 3PLs are increasingly deploying automation and robotics to streamline operations and meet labor challenges. “The lack of worker availability risks the throughput of facilities and jeopardizes forecasting,” says Andy Johnston, director of innovation at GEODIS in Americas. “We saw these labor challenges even before the appearance of the COVID-19 pandemic, and we expect them to continue.”
“If you had staffing problems when you were moving 50,000 units a day,” he continues, “imagine your troubles if your forecast increases to 100,000. Adding robots to facilities helps in this area.”
Robotics help warehousing operations in multiple ways. Two popular types are goods-to-person robots and collaborative robots. “Goods-to-person” robots assist packers by retrieving sought-for products and delivering them over to their human partners. Collaborative robots do the traveling within the warehouse, sparing human workers the time and effort of navigating a million square-foot facility to pick an item or put it away.
“The main purpose is to increase productivity,” says Johnston. “We’ve seen productivity rates double when we’ve implemented technologies to make our teammates more efficient. At the same time, we can assign freed-up teammates to other roles on campus.” Adding robots to warehouse teams also reduces training times and costs, he says.
Other forms of warehousing automation are also gaining steam, including the deployment of autonomous equipment such as forklifts and pallet jacks, capable of moving loads from packing locations to drop-off areas on the dock. Implementing pick-to-light systems, which aids human pickers by lighting up the location from which a product is to be retrieved, is also on the increase.
“In each case,” notes Johnston, “a certain amount of interaction between the system and the human is required in order to fully complete the task.”
Implementing robotics in warehouses is becoming easier and more cost effective with the advent of new business models such as robotics as a service (RaaS), modeled on the software-as-a-service (SaaS) paradigm. “Rolling up-front costs into monthly fees and signing longer-term agreements provides a level of cost certainty,” Johnston explains. “It allows companies to convert the variable costs of labor into fixed costs over a period of years.” And that benefits not just warehouse operators, but their customers as well.
Above all, the addition of robotics provides value both to warehouse operators and their logistics customers at the operational level. “Having people do what robots are capable of doing doesn’t add value and isn’t the best use of labor,” says Johnston. “Often a single worker can operate the machines that can perform the tasks of eight to 10 people. By implementing robotics in a smart way, trained personnel no longer have to complete highly repetitive tasks—which in turn enhances the employee experience and increases retention efforts.”
All of these technologies help 3PLs better manage their warehouse operations, allowing logistics providers and their customers to streamline operations and costs. But what of the larger visibility picture?
It’s highly unusual even for the largest of 3PLs to manage a global company’s worldwide supply chains. The challenge becomes how to provide information on supply chain performance at the corporate level when that data is being generated and processed by disparate players, while simultaneously having the capability of answering all types of queries. And, of course, the data must cover all aspects of supply chain and logistics operations, from warehousing to deliveries, and all modes of transportation.
“What’s required to pull this off,” explains Narayanan, “is a platform that’s robust enough to add features that the customer wants, as well as add supply chain participants.”
Adding stakeholders allows a platform to consolidate data and provide intelligence that approaches the global end-to-end visibility that companies want. At the same time, such a platform would be flexible enough to curate answers to queries by accessing data most relevant to the user, in the manner of an internet search engine.
“If a user needs data from Europe, the platform must be nimble enough to get that data into the platform,” says Narayanan, “and if they want to know what’s happening in Houston, they should be able to get that information, too. And the platform must also be robust enough to get answers to customers when they need it.”
The technology might not be fully here just yet, but these kinds of platforms are in the process of being developed, often by leaders in the supply chain management space. “Flexible platforms can increasingly consume data from all modes of transportation and the four walls of the warehouse,” says Narayanan. “You’re increasingly seeing the consolidation of data providers and aggregators, and those developments are advancing capabilities for sharing data. We’re getting to the point where all supply chain participants can exchange data on a single platform, and configure the use of that platform to provide the features that individual customers want and need.”
As we move into the future, Narayanan continues, we will see the trend of incorporating more and more external features into visibility platforms to provide a complete, 360-degree view of the entire supply chain. For example, companies are increasingly concerned with how to reduce their CO2 emissions to ensure their supply chains are environmentally friendly. Visibility platforms will be able to track this on a more sophisticated level moving forward. Additionally, integrating social listening data within visibility platforms will be another big focus in the future in order to pick up on important news (for example, with a port strike). This will help companies be more nimble in navigating unexpected events.
Today’s platforms increasingly deploy big-data capabilities to provide predictive analytics to supply chain stakeholders. “Tying all supply chain data together and accommodating all supply chain participants,” says Narayanan, “is key to achieving that vision.”
Third-party logistics providers are playing key roles in fulfilling that quest, says Johnston. “Many have built teams focused on evaluating technology innovations and studying how they can be incorporated in their operations.”
At the same time, 3PLs are placing these innovations at the disposal of their customers. “Companies are able to take advantage of all the work 3PLs have done so they don’t have to do it themselves,” says Johnston. “They can focus on their own core competencies by leveraging all of this knowledge, and by taking advantage of the continuous improvement efforts pioneered by 3PLs.”
In their efforts to foster innovation in partnership with customers, 3PLs are focusing on continuous improvement. “It’s important to remember that there’s not a starting point and an end point to these processes,” says Narayanan. “It’s an ongoing story about what 3PLs can do with data and how they can add value for their customers. It’s a dynamic process, and those who don’t see it that way risk getting left behind.”
Timely, incisive articles delivered directly to your inbox.