What’s holding your 3PL back from adding more new customers? In
this QAD Precision Report, we look at value-added services logistics
providers can offer to meet the changing needs of customers.
If you’re like many third-party logistics providers, changing times
are forcing you to take a broader view of the services your company
provides, especially in the areas of global trade and e-commerce.
In an era of rising real estate prices, warehouse shortages, high
commodity prices and ongoing trade disputes, 3PLs cannot simply rely
on adding warehouse space and shipping capacity to stimulate growth.
This reality is leading many logistic providers to look to value-added
services that leverage current assets to attract new customers.
Third-Party Logistics Study found that shippers who do not have
the technological capabilities to service the ever increasing demands
of customers see the value in partnering with logistics providers who
do. Furthermore, the study found that many 3PLs have begun investing
in technology that allows them to analyze shippers’ operations.
A major driver of growth for 3PLs is e-commerce fulfillment. The
figures for this are staggering. Take this past Thanksgiving holiday
as just one example. On Black Friday, shoppers in the United States
billion online — an increase of 19.6 percent compared to last
year. What’s more, 2019 was the first year that consumers spent more
online than in-store on Black Friday. Online shopping figures jumped
this Cyber Monday too. This year, US shoppers spent a record $9.4
billion online over the course of Cyber Monday. This too
represents a significant increase on the 2018 figures — a 19.7 percent.
3PL Value Added Services and Technology
Every business wants to change with the times to add services that
are meaningful to their customers. 3PLs are no different in this
respect. But there’s a challenge. For many 3PLs, their current
technology does not support the types of services their customers demand.
The 3PL business is evolving from an asset-based business that is all
about warehouses and shipping capabilities to one that is equally
about technology, service and expertise. Allowing 3PLs to leverage
their expertise in supply chain management requires the ability to
offer the latest technologies and services to provide customers with
capabilities that make the entire supply chain operate more
efficiently in an industry that’s increasingly global and complex.
3PLs are responding by providing a whole array of value-added
services that ease the burden of shippers, shifting more
responsibility and risk from manufacturing and sourcing entities to
those that provide a link to the customer that ultimately receives
them. These value-added services can incorporate a wide variety of
activities such as kitting and bagging, labeling or even final assembly.
But perhaps the greatest growth opportunities lie in value-added
services that allow 3PLs to support global trade and e-commerce
activities. Let’s have a look at some of these services.
Third-party logistics providers can differentiate and attract new
business by helping their customers manage the challenges of
cross-border and international shipping with export
management solutions. With the right software, 3PLs gain
intelligent visibility into transportation processes as shipments make
their way around the globe. Export execution software streamlines
international shipping, by automating export processes, documentation
production and customs reporting. This includes ensuring that
necessary licences and permits are in order, providing access to an
up-to-date database of customs and industry reporting documentation in
dozens of languages, along with electronic customs reporting.
RESTRICTED PARTY SCREENING
compliance is another significant pain point that 3PLs can address
as a value-added service. One area that needs particular attention is
restricted party screening. Shippers must ensure that they are not
doing business with groups, entities or individuals that appear on any
denied or restricted party lists. Violations can be extremely costly
for 3PL customers, but it is almost impossible to manage screening
manually. Published lists of sanctioned and restricted entities change
frequently and without warning. Consequently, it is challenging for
companies to keep up. By offering restricted party screening as a
value added service, 3PLs can help customers manage risk and reduce
The right software is the key to offering this service. Your provider
should deliver automated updates from regulatory agencies around the
globe in real time. Furthermore, your solution should provide a fully
documented audit trail so you can prove due diligence to customers and
regulatory agencies on demand.
Much of the growth in 3PL is driven by e-commerce fulfillment. The
2019 Third-Party Logistics Study found that many retailers and their
3PL partners face substantial difficulties in creating a true,
omnichannel retailing experience. In fact, only 4 percent of shippers
believe that they have high-performing omnichannel operations. More
than a third —38 percent —rated their operations as inconsistent. A
further 36 percent said they lacked capability. The figures from 3PL
respondents were just low. Only 3 percent of 3PLs rated their
omnichannel operations as high-performing and a further 14 percent
claimed that their operations were efficient.
It is clear that investing in omnichannel fulfillment offers the
potential for growth. Due to the global nature of e-commerce, being
able to connect to a global
carrier network is a critical requirement. Moreover, regional
carriers tend to provide industry/niche specific services and
pick-up/drop off point determination.
To do so, of course, requires parcel shipping software that many 3PLs
— even those that have handled traditional order fulfillment — may be
lacking. E-commerce fulfillment is driven by small package sizes,
demand for rapid delivery and the ability to provide up to the minute
status on deliveries. Multi
carrier shipping software enables you to manage your shipments
from a centralized system, connect to a truly global carrier network,
compare costs and service levels across multiple parcel carriers and
consolidate shipments to save cost.
Logistics providers need to consider the value-added services that
are most attractive to their customers, either in one location or in
multiple locations across the globe. By investing in the technological
and operational capabilities that support their customers growth
strategies, 3PLs offer more than just warehousing and assets, but a
About QAD Precision – Trusted Global Trade and Transportation Execution
QAD Precision (Precision Software), a division of QAD Inc., provides
trade compliance, transportation
carrier shipping software solutions from a single, integrated
platform. Preeminent industry leaders in every region of the world
rely on QAD Precision’s global support centers to leverage thousands
of carriers and manage millions of shipping transactions every day.
Our open architecture easily integrates with Enterprise Resource
Planning, Warehouse Management Systems and legacy solutions. An
ISO-certified company, QAD Precision assists companies to minimize
shipping costs, optimize first mile and last mile deliveries, automate
free trade agreement compliance, avoid customs delays and mitigate
the risks associated with dynamic trading environments to
maximize their competitive advantage. QAD Precision’s customers span
multiple industries including banking and finance, life sciences, high
technology, retail, industrial, automotive, higher education and
public sector as well as logistics providers. For more information
about QAD Precision, visit www.qadprecision.com.
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