I had the pleasure of chatting with Ron McIntyre, vice president of Technology and Innovation, at Fuel Transport. As a leading third-party logistics (3PL) fulfillment company, I wanted to get his perspective on what 3PL challenges his organization is facing these days.
The supply chain has never been more complex than it is today. 3PLs are well-positioned to provide supply chain resiliency to their customers — capable of scaling up, down and sideways — to respond rapidly to changes in demand. However, the road to success is paved with obstacles. I thought it was important to highlight the three challenges Ron discussed in his conversation with me in the hopes other 3PLs can extract lessons and insights to strengthen their own organizations.
3PL Challenges (and Tips for Overcoming Them)
1. Digital Transformation
Ron stated, “Even before the COVID pandemic, we saw a shift in organizations requiring 3PLs and logistic service providers to basically help them with their digital transformation journey. These companies need to keep up with the requirements that are coming from their customers. What comes from that means our customers, shippers and warehouse partners must be able to provide the type of capabilities, information and data exchanges that they’re looking for in today’s fast-paced e-commerce world.”
I was not surprised Ron listed digital transformation as a 3PL challenge. At Tecsys, we see 3PL distributors are being pushed like never before due to the massive rise in e-commerce. Whether it’s a retailer who wants to start their own brand and looks to their 3PL to store and ship to their customers or a manufacturer that wants to go direct to consumer and has no facility to manage that low unit-of-measure order process needed to support e-commerce. In both cases, the retailer and the manufacturer are pushing their supply chain problems onto their 3PL distributor to solve.
How to Overcome the Digital Transformation Challenge?
In a separate conversation, I talked with Vito Calabretta, senior vice president of Global Operations, and Mark Hawksley, vice president of Project Architecture and Delivery, at Tecsys to get their expert advice on what an organization should consider before embarking on a supply chain digital transformation project. Both Vito and Mark discuss how to avoid common obstacles, manage costs and achieve time to value.
Watch our insightful interview to find out the key factors to successful supply chain digital implementation.
2. Labor
The second 3PL challenge Ron spoke about was on the human capital side. He noted, “It’s getting harder and harder to attract human resources. Everybody is competing for the same diminishing pool of available resources — whether it’s on the technology side, the warehousing side, HR, administration or transportation. Human capital is in short supply and this means you can’t throw bodies at problems anymore. The ability to work from anywhere at any time on any device is now paramount. You must work smarter. In the future, I think it’s going to be even harder to attract talent. That whole idea these days is don’t throw bodies, throw brains.”
I agree completely with Ron’s assessment. In my opinion, the days of cheap labor are over and the increasing cost (and unobtainability) of labor will be one of the defining factors on how 3PLs and warehouses in general are designed, managed and staffed.
How to Overcome the Warehouse Labor Challenge?
I interviewed Meredith Levknecht, senior warehouse consultant, at Tecsys to discuss the changing face of labor in warehouse management. She gives deep insights on marketplace trends in labor training from her breadth of experience working with customers across North America on warehousing logistics.
Watch this short 10-minute interview to learn best practices on how to manage and support your modern warehouse labor force.
3. Innovation
Ron wrapped up our conversation about 3PL challenges when he spoke about innovation. He shared, “Within our organization, we’re focusing on innovation at all times and not only on technology, but also how can we innovate on our processes? It’s really about fostering this whole culture of doing things better and always looking for opportunities to do things better.”
From my experience, innovation is a common factor we see in the top-performing companies we talk to. In today’s hyper-competitive world, the only way of becoming and staying an industry-leading organization is to build a culture of innovation. Hire young and excited engineers and don’t tell them what they can’t do. Challenge them and foster a belief that projects may fail, but so long as you learn from them, they are a success. If they come up with things that work, implement them and reward their successes. And don’t forget that innovation doesn’t always have to mean some big idea or project. Small but continuous improvements that are fostered by a culture of acceptance are critical to get to the top and stay there.
How to Overcome the Innovation Challenge?
I conducted a great interview with Thom Campbell, chief strategy officer, at Capacity to discuss culture and technology in the warehouse. As a leader of order fulfillment, e-commerce and electronic data interchange (EDI), Capacity understands the importance of adapting its processes and culture to support the modern warehouse labor force.
Watch my interview conversation with Thom Campbell to find out how Capacity is innovating to address the needs and expectations of its warehouse staff.
What’s Next
If any of these three 3PL challenges resonated with your organization, then I hope you take a moment to watch my other interviews for expert guidance. I know that 3PLs are tight on budget; your workforces are strained and often you don’t know where to start building (or rebuilding) your warehouse operations. At the same time, the decisions made early on can make or break how your workforce performs and your business grows.
Whether you are just starting to build your warehouse strategies, or want to start over, check out this on-demand webinar below and be ready to leave with the top approaches to turn your warehouse into a powerful automation machine for years to come.
