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THREE VALUE-ADDED SERVICES THAT HELP 3PLS ATTRACT NEW CUSTOMERS

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.

The 2019 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 spent $7.4 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.

EXPORT EXECUTION

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 execution 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

Trade 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 their liability.  

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.

E-COMMERCE FULFILLMENT

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 true partnership.

About QAD Precision – Trusted Global Trade and Transportation Execution

QAD Precision (Precision Software), a division of QAD Inc., provides industry-leading global trade compliance, transportation and multi 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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