What is logistics in real life?

Given the logistics industry’s seemingly endless transformation, logistics management is naturally made up of many different elements. These components include the planning, procurement and coordination of manufacturing materials, strategizing the development of a product and reclaiming materials and supplies involved in the manufacturing of a product. For logistics managers, keeping track of the many different aspects of a supply chain can be nearly impossible. Luckily, logistics tech has successfully reshaped the industry, turning it into a robust sector fueled by the rise of innovative new technologies.

• FourKites
• project44
• Motive
• Volansi
• Flexport
• Transfix
• Arrive Logistics

AI and Optimization in Logistics 

As the demand for online delivery grows and consumers’ expectations become larger, the need to optimize logistics has never been greater. As a result, software developers have set to work creating platforms designed to make the supply chain more manageable. Real-time visibility software providers such as FourKites, project44 and FreightVerify empower supply chain operators to simply identify issues and quickly resolve them, saving organizations huge amounts of time during which they can focus on other aspects of the logistics process. Likewise, fleet management company Motive has made it easier to track cargo and drivers while improving efficiency and safety along the supply chain.

Considering all of the work that goes into Amazon’s e-commerce services, it may come as no surprise that the company relies heavily on the latest technology in order to accomplish its consumer delivery goals. Amazon has been using AI to power its product recommendations for years. The company has also adopted machine learning to build the handheld virtual assistant, Amazon Echo. 

Warehouse Automation in Logistics

Amazon doesn’t solely use technology to maximize the customer experience. In fact, the company’s technological expertise extends to its packaging and delivery services. The e-commerce company made headlines in 2012 when it introduced automation into its supply chain upon acquiring Kiva Systems. Today, Amazon’s warehouses are filled with thousands of robots built to optimize the picking and packing process.

Amazon isn’t the only logistics leader that has unlocked the potential of robotics. In fact, the warehouse automation space has grown tremendously over the past several years and is expected to become increasingly more valuable over time. The growth of this sector is attributed largely to the steady rise of e-commerce, which has ignited the need to send products out quickly while lowering operating costs. The popularity of online grocery shopping in particular has bolstered the growth of warehouse automation, as online grocery retailers have been forced to meet consumers’ ever-increasing demands while competing with brick-and-mortar stores.

Autonomous Vehicles in Logistics 

As warehouse automation continues to infiltrate the logistics industry, autonomous vehicles are becoming a supply chain essential. For companies like Amazon, self-driving vehicles are not only profitable within the warehouse, as they harbor the potential to make on-road delivery faster and more efficient. Companies like Starship Technologies are developing revolutionary new ways to autonomously transport goods, thus unleashing new possibilities within the logistics realm.

Drones in Logistics 

Alongside the emergence of autonomous vehicles, the commercial use of drones has opened up new avenues for supply chain management. Within a warehouse setting, drones can be used for aerial inspection and can even carry out maintenance requests, all of which can save manufacturers vast amounts of time.

Given drones’ ability to quickly transport small items, many tech companies are trying their hand at developing aerial transportation modes. For instance, logistics startup Volansi has created unmanned aerial systems designed to quickly deliver materials and reduce unnecessary warehouse inventory. In doing so, the company aims to help managers have more control over their supply chain while saving substantial amounts of money.

3D Printing in Logistics

While there are many options when it comes to packaging and delivering goods quickly, supply chain experts are still searching for ways to manufacture products at a speed that meet consumers’ growing expectations. For this reason, 3D printing has entered the logistics space as a possible solution. The process of gathering supplies and producing a product often requires the most time and effort within the supply chain setting.

If 3D printing were applied to the production process, consumers would have greater control over the supply chain. Potentially, a consumer could place an order for a product and then a local 3D printer shop would quickly create the product before sending it out for delivery. 3D printing could ultimately disrupt the logistics industry, as it offers manufacturers the opportunity to produce complex and customized goods faster than ever before.

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When you order something online, what do you spend your time thinking about before it arrives? Most likely, how those new curtains will look in your new house. Or opening up that shiny new tablet. Even questioning whether or not a month’s supply of Pocky snacks were enough. 

You probably aren’t thinking about third-party logistics. The work of third-party logistics networks goes on behind the scenes, so many of us take it for granted.

3PL companies are third-party warehouse operators who can be contracted to fulfill and ship orders on behalf of enterprise clients. Retailers can outsource their inventory tracking and shipping operations to third-party logistics companies in order to save time and money.

“We’ve trained customers to expect that when they hit the order button, their stuff will magically appear at their door,” said Chad Biggins, founder and CEO of New York-based 3PL startup TransGlacier. “But there’s a lot of work that allows things to flow smoothly.” 

For our purchases to arrive on time, the processes of shipment and delivery need to work like a well oiled machine. Here’s how third-party logistics companies are keeping the global economy running, and where the industry goes from here.

More on Logistics19 Logistics Companies Getting Packages to Our Doorsteps

What Are Third-Party Logistics

Between placing an order online and opening the package on your kitchen counter, there is an elaborate system of truckers, warehouse specialists and shipping companies that work to get your items from point A to point B. Some companies manage their shipment operations from their own warehouses, but many companies outsource theirs to third-party logistics (3PL) companies that focus solely on fulfilling product shipments and orders. 

“A 3PL company is a warehouse that receives and stores products, and then ships them to the end consumer, either leaving it on the doorstep of someone’s home or sending it to a retailer for further distribution,” Biggins said.

It’s estimated that around 90 percent of Fortune 500 companies enlist the services of third-party logistics companies, according to research from consulting company Armstrong & Associates. The reason for this is simple: it’s easier, quicker and cheaper. 

“A 3PL company is a warehouse that receives and stores products, and then ships them to the end consumer, either leaving it on the doorstep of someone’s home or sending it to a retailer for further distribution.”

“Partnering with a 3PL means you don’t have to be an expert of supply chains,” Biggins said. “You can aggregate your costs, and because a 3PL usually ships for multiple clients, they can give you discounts on packaging and postage.”

Third-party logistics vendors understand that fulfilling and shipping orders is its own full time job. If you’re a business owner, trying to fulfill orders on your own can eat away at the time you could be spending making your products stronger and growing your business. Outsourcing your order fulfillment operations gives companies more time to focus on developing other parts of their business. It also gives them more peace of mind, said Mendel Mangel, CEO and founder of Cincinnati-based logistics company Frankly Fulfillment.

“One of our customers had an influencer post about their product without them knowing, and as a result they did over a thousand orders in a weekend,” he said. “But we were able to fulfill all those orders by Monday afternoon. We act as your warehouse and shipping team, so that you don’t have to worry about it.”

How 3PL Has Evolved

The beginning of the 3PL industry can be traced back to the ​​Motor Carrier Act of 1980, which deregulated the trucking industry and paved the way for independent logistics companies to expand their operations. But Biggins said that the true catalyst for third-party logistics came with the evolution of the internet. 

“What originally got me interested in the industry was the power of the internet, and watching how fast a product can scale online,” he said. 

The internet gave companies the option to open e-commerce platforms and sell their products to a global customer base. The technology boom of the early 2000s also gave logistics leaders new supply chain visibility tools like order tracking and warehouse organization software to expand the scope of their operations. 

The next big leap in logistics, Biggins said, happened because of the pandemic. With companies like Target and Amazon promising same-day delivery options, 3PL companies had to upgrade their operations quickly in order to compete and satisfy the needs of a customer base stuck at home.

“So many restaurants and stores were shut down, so a lot of those people went and worked in logistics,” Biggings said. “That’s how we were able to scale up so quickly.”

While the lockdowns made some logistics providers rich, they also exposed a lot of weak links in the supply chain. The spike in online purchases meant order fulfillment centers had to scramble to meet that demand, leading to unprecedented package delivery delays throughout the early stages of the pandemic. 

“The pandemic really stretched the industry thin and pushed its capacity and volume further than it had ever done before,” said Biggins. “3PLs had to push products out faster, and that stretching broke a lot of relationships and trust.” 

Setbacks like these haven’t hindered the growth of the 3PL industry, which is valued at over $950 billion globally. Now that customers have gotten a taste for next and same-day delivery, third-party logistics providers will scramble to get products to doorsteps as fast as possible. But Biggins warns that the push for instantaneous delivery is unrealistic, and comes with a price. 

“When you push the industry too hard, quality goes down, error rates go up, and so does turnover,” he said. “All this stuff is not limitless.”

More on Logistics19 Shipping Companies Powering the Supply Chain

The Future of Third-Party Logistics

There’s a lot more to third-party logistics than packing boxes into trucks. Managing order invoices, tracking packages and keeping in touch with customers is a complicated dance, and fulfilling orders in a modern economy requires modern tech tools. 

“The basic tech stack includes a warehouse management system (WMS) that can plug into a shopping cart software,” said Mangel. “We use Shopify, WooCommerce, and other kinds of shopping cart tools to store and track inventory.”

Fishbowl Inventory, Aptean Catalyst, Oracle Netsuite and other warehouse management systems allow users to track labor and inventory and can send them alerts about in-stock items and reordering. 

“Most of the platforms have some sort of open API, so warehouses can also add their own layers of business intelligence or data analytics tools based on their customers’ needs,” Biggins said.

“People forget that there’s always someone that has to load and unload trucks and airplanes along the way.”

But the path of logistics technology doesn’t end with order tracking software. The global demand for quick delivery is changing by the minute, and 3PL leaders will need to brainstorm more creative ways to get packages delivered fast. By Mangel’s prediction, this means the future of logistics technology lies with automation.

“It used to be that only large companies could get involved in the robotics and automation space,” he said. “But we’re starting to see a lot of players coming into the robotics space to help smaller 3PLs take advantage of that technology in some way.”

Automation and robotics technology can speed up operations on the warehouse floor, making it faster and easier to move products from trucks to shelves. But while automation can speed up logistics operations, Mangel said that 3PL is still only human.

“People forget that there’s always someone that has to load and unload trucks and airplanes along the way,” Mangel said. “There are so many human beings involved, and everyone has to be there for things to work properly. I feel like that can really put things into perspective.”