The need for third party logistics companies has grown greatly over the past decade. With the rise of e-commerce, many companies do not wish to host their own distribution for those channels of sales. The solution is for businesses to outsource elements of their distribution and fulfillment operations to handle orders coming in and going out. The benefit of a 3PL is sufficient. No longer does a company need the starting capital or intense knowledge of automation to excel in the world of e-commerce. Start-ups can now outsource the distribution process instead of starting from scratch - providing a faster go-to-market strategy and a reduction of upfront capital.
According to Derby Supply Chain Solutions,
"Using a 3PL provider eliminates the need to invest in warehouse space, technology, transportation, and staff to execute the logistics process. 3PL providers can save from costly mistakes, and allow your business to build a global logistical network with lower risk and higher return."
Whether a high-volume e-commerce company, subscription service, consumer goods wholesaler, automotive supplier, or start-up retailer, you may be using or have considered using a Third Party Logistics (3PL) company to help with distribution to your customers. Traditionally, 3PLs used very manual processes requiring fluctuating labor resources to manage peak demand.
Today, technology is enabling even more successful operations for 3PLs. For cost-effective operations to meet the ever-growing volumes and service level expectations of their customers, more and more 3PLs are looking to add automated material handling solutions. It is a fine line for most third-party logistics companies finding the right ratio of automation to labor, especially when competing to win new contracts, which may only be a few years long. The key is having the perfect balance of automation, labor, and capital in a system.
To find that balance, 3PLs are installing more solutions and complex automation, which can vary in upfront cost, throughput and ROI.
There is a strong, growing interest from 3PLs in more automated solutions that rely less on a large labor force as it becomes increasingly difficult to find employees. 3PLs are even starting to look to goods-to-person systems as potential options. It really shouldn’t come as a surprise given the growing demands being placed on them around:
- Higher service level requirements and expectations for faster order fulfillment times
- Increasing volumes of packages to handle through e-commerce business growth
- Demand for more visibility and metrics capabilities
- Challenges finding enough labor to meet demand
As 3PLs begin to consider the leap toward automation, it doesn't have to be an all or nothing investment. Depending on available capital, current business, and future goals, automation can be implemented in various levels to maximize ROI.
- Pick Modules
- Gravity Conveyor
- Pallet Racking
- Narrow Aisle Racking
- Carton Flow
Established 3PLs generally have a WMS
and perform picking by label or RF. Process optimization with different storage types based on product velocity is a low upfront cost solution. Ease of access for picking and reduction of replenishment movements improve labor efficiency and use.
- Pick to Light
- Pick to Voice
- Conveyor Sortation
- Software - WCS - Warehouse Control System for conveyor routing and sortation
Once a 3PL has a WCS
implemented at a location, it provides flexibility for the future. As the customer has new business requirements or demands, it is faster and easier to add new software functionality and integrate additional equipment.
- AS/RS - Automated Storage and Retrieval Systems
- Robotic Palletizing
- AGVs - Automated Guided Vehicles
- Mobile Robotics
- Software - WES - Warehouse Execution System – managing balanced release of work and inventory in goods-to-person technologies
Invest in this level of automation for the highest throughput, flexibility and accuracy.
Automation Benefits - Recent Customer Successes:
- Customer 1: Got additional facilities online quickly with pick to light by using the same Exacta WCS modules used at another location and the same WMS interface.
- Customer 2: Added a scale for weight check to an existing Exacta WCS prior to sortation at shipping lanes.
- Customer 3: Earned new business by replicating and quickly deploying its automation system and processes for the new customer.
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