Third-logistics providers are under increasing pressure from customers to provide services with maximum efficiency and speed. Are they embracing the automated systems that they need to make that a reality? Advice from Chipper Farley, president of 3PL solutions with Made4Net. 

The need to integrate information systems and automation has been an integral part of the 3PL industry for a long time, Farley says. But much of that effort has focused on file-based activities, often aided by electronic data interchange.

More recently, 3PLs are realizing that it’s better to integrate systems through application programming interfaces (APIs), while extending the exchange of data to include not just clients, but also suppliers, end-users and the many third-party tools that make up a modern-day warehouse operation. As a result, “the scope of what integration means to a 3PL is bigger now than it’s ever been,” Farley says.

COVID-19 was a “big game-changer” for distribution operations in general, and 3PLs specifically. It drove massive growth in e-commerce, forcing service providers to embrace omnichannel distribution. In the process, the need for melding warehouses with retail sites and return centers have added a huge amount of complexity to the fulfillment model.

Artificial intelligence, of course, is poised to play an important role, but when it comes to the 3PL sector, AI is still “on the periphery,” Farley says. He’s seen “a fair amount” of APIs driving autonomous units such as drones and robots, but “still quite a few [3PLs} are not entirely sure what AI really is, or what it can do. It’s a mystery to some, but it is everywhere.”

Automation is a natural option for margin-challenged 3PLs, given its ability to boost operational efficiency with fewer resources. What will accelerate adoption, Farley says, is more flexible systems that can be adjusted according to changing patterns of demand.