Issue 7 2017 - FBJNA


3PLs face challenge of innovation By John Jeter

Today’s consumers are just a click or two away from satisfaction. One click here, another there and, presto!, their shipment arrives at their doorstep—not by any magic, but through technological innovation. More and more, third-party logistics companies must deploy high- tech solutions to survive in the so-called B2Me age: Business to Me, as in “me,” the consumer. “There’s a combination

of rising expectations from customers, clicking a button and wanting to get that product quickly, maybe even today. Customers are expecting more, and when you combine that with the amount of information that’s available, if these companies aren’t putting that system in place, you know their competitors are,”

says Robert Oliver, a solution architect at Quintiq. A global supply chain

planning and optimization software company, Quintiq recently added a leading LTL company to its list of global customers. YRC Freight has more than 250,000 customers, and YRC uses Quintiq’s software solution to better route and schedule their 11 million shipment deliveries each year. Quintiq, part of Dassault

Systèmes, provides software its customers use to schedule not only trucks, but trains, ships, planes, and people. (Fun fact: The optimization software schedules air-traffic controllers who manage 65% of the world’s airspace. While that may look like an HR issue, Oliver says that particular

puzzle’s enormous complexity is essentially the same that 3PLs face with growing globalization.) Quintiq’s

Kingdom. “These new-market and 3PLs,

smaller algorithms-based

“continuous optimization” software crunches what Oliver calls “big calculations,” his term for Big Data, leveraged to solve those puzzles. He says 3PLs have to “really take a look at technology and how they can keep pace with their competitors.” Cutting-edge 3PLs these use

days advanced data

analytics, mobility, the Internet of Things, and other high-tech tools. Those that aren’t in the

innovation game are in big trouble,

according to Jim

Barnes, Indianapolis-based CEO of enVista, a supply chain and IT consulting company, with headquarters in Indiana and Liverpool in the United

quite frankly,

aren’t innovating because they’re not highly capitalized,” he says. “They don’t have the capital to go make these enabling technologies’ investments to be competitive, which is ultimately going to limit their growth.” Asked if 3PLs are behind the innovation eight says,

ball, Barnes doubt.”

“Absolutely. There’s no How far behind? In

some cases, three to five years, he says. “Here’s reality. Everybody

can put an item in a box and move a pallet. It’s not that complicated. You and I can start a 3PL relatively quickly. There are 3,000 3PLs that provide those same basic operational functions, so how are you going to differentiate yourself from your competitors? I believe

seamless data integration, data visualization, and analytics are the big differentiator.” Barnes says he’s concerned

mostly about mid-market 3PLs, $500 million and below. “There are some 3PLs we work with today that are teetering in the wrong direction because they’re still trying to figure it out, and my point is, you’ve got to do something—and now.” “What I would say to

those companies,” says Biju Kewalram of Agility, a global logistics company, “is, don’t expect technology to be a capital-expenditure type

“These new-market and smaller 3PLs, quite frankly, aren’t innovating

because they’re not highly capitalized.” -- Jim Barnes, enVista.

of item. You’ve got item. to start

thinking of that as a recurring expenditure

That’s a

right mindset.” Kewalram has the title to back up his 30 years’

key. You’ve got to think about investing in people with the

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