3PLs role as tech experts in demand chains

By Peter Buxbaum

APAC Sale Group is one of Australia’s largest online retailers, with a customer base of almost 11 million. Its mission: to get e-commerce goods from places like the Unites States, the United Kingdom, China, Singapore, and Korea to consumers in Australia and New Zealand. The company turned to SEKO Logistics to airfreight 1.3 million customer

Why would a shipper rely on

a 3PL to implement these kinds of systems themselves instead of developing them internally or buying them directly? “The project would be put in a queue with other IT department projects and it would probably be put at the bottom of the list,” said Bourke. “Companies want to focus on systems that are more core to their

“In many cases we’re printing out Australia and New Zealand postal labels in the US.”

-- Brian Bourke, SEKO Logistics

packages each year from APAC Sale’s offshore warehouse locations into Australia. APAC also asked SEKO to

implement technologies that actually impact the customer- service experience. With a platform implemented by SEKO, customers can track international and domestic delivery events, by way of a branded tracking portal that matches the look and feel of APAC Sale brands. When customers are directed to the portal, it looks as if they have arrived at an APAC internal tracking site. The APAC-SEKO relationship

is emblematic of a growing trend in which shippers are relying on third-party logistics providers (3PLs) to implement technologies that play a role in end-customer relationships. It also points to the growing hyper-focus on those consumers, representing a change in orientation from traditional supply chains to demand chains. 3PLs have increasingly become logistics technology experts, adapting the latest technology developments to benefit their customers as well as their own internal operations. In the case of APAC, the SEKO

system was also integrated with those of last-mile delivery services. “In many cases we’re printing out Australia and New Zealand postal labels in the US,” said Brian Bourke, vice president of marketing at SEKO Logistics. “The consumer receives orders in four to seven days with standard shipping and might not even know they were fulfilled in the United States.”

the customer with a specific engagement point, so we don’t spend dollars on the technology too early or too late. We prioritize technologies based on how they match our customer base.” Kewalram has found

that Agility’s customers are increasingly concerned with visibility and predictability, so the company’s technology efforts have focused in large part on those two attributes. Agility has also adopted the Agile approach to soſtware development, a lean process not directly related to the company’s name, which takes an iterative approach that yields rapid development.

IoT Fits into Framework

businesses, like production and finance, and rightly so. 3PLs can develop and provide these tools to add value on top of the freight forwarding and other logistics services they provide.”

Angst of Tech Disruption

The rush of technology development can overwhelm decision-making processes in 3PLs—and other kinds of companies—causing confusion as to which to pursue and which to put on the back burner. Biju Kewalram, chief digital officer at Agility GIL, has noticed that some companies get caught up in the “angst of technology disruption,” leading Agility to develop a framework for evaluating and implementing new technologies that takes them through three states: monitoring, piloting, and implementing. The trend toward customer-centricity has helped the company create some order out of this chaos. “When we are able to create

customer-centric value with a technology, we move from monitoring to piloting, and we do it through a refined process involving customer engagement,” said Kewalram. “We approach

The Internet of Things, a phenomenon which allows sensors to monitor a variety of shipment attributes, is one leading-edge technology that fits neatly into this framework. Agility has applied the technology to monitoring shipment temperatures and stability, as well as to the geo-fencing of shipments. For temperature- sensitive shipments, especially, “customers want to know if they have gone outside of tolerance parameters,” said Kewelram. “IoT can also tell whether a shipment has been shaken up and whether a truck may have gone off route,” the last item being relevant to whether a shipment may have been exposed to adverse environmental conditions. The focus on the end customer

has also led 3PLs to help their clients sense and shape demand with technologies like data

“When we are able to create customer-centric value with a technology, we move from monitoring to piloting. We do it

through a refined process involving customer engagement,”

-- Biju Kewalram, Agility GIL.

analytics, machine learning, and visualization. “Retailers have experienced problems from poor

demand president planning that

doesn’t reflect what factories are producing,” vice

and strategy at APL Logistics.

said Thad Bedard, for


technologies that support new shipper requirements, also points to a transformation in the orientation of freight movements, from supply chains to demand chains. “Historically, implementing supply chains revolved around sourcing and

“Machine learning platforms can sense demand from different points and can figure a probability- based projection.” APL Logistics has applied data

analytics technology to customer segmentation, which helps shippers understand where to focus their supply-chain efforts. “This gives retailers a better idea of what their real markets are and who is buying their products,” said Bedard, “as opposed to taking a scattershot approach. We are aggregating structured and unstructured data to give customers a view of their supply chains.”

This data also helps with

logistics because it helps shippers more accurately forecast their transportation needs and costs. Analyses are used at the executive level

to understand

things like delivery lead times and to diagnose problems of on-time performance and inventories. Visualization technology can provide a birds-eye view of supply chains to understand product flows, density problems, and areas that need to be addressed. “Without

this kind of

information, our customers are planning to fail,” said Bedard. “They will be building too much or too little of specific products and they won’t be able to satisfy their

customers centricity, with on-time

deliveries.” The advent of this customer- combined with


Issue 7 2018 - FBJNA

supplier management,” explained Bourke. “Distribution centers were set up to house inventory and everything was purchase-order focused. The point was to build out inventory and to sell through different channels.” That mentality is being

disrupted by the hyper-focus on the end-customer experience— the frictionless ease of use and ease of execution of selling systems supported by seamless deliveries. 3PLs are increasingly


focusing on home deliveries, with companies like SEKO Logistics performing final-mile operations for clients that require delivery of bulky items. To that end SEKO has and implemented


systems that support the customer experience, allowing them to engage by way of chat and text messaging and to schedule deliveries online. Said Bourke: “Everything is being built backwards form there.”

Robots and Drones The kinds of innovations

being implemented by third- party logistics providers (3PLs) are not limited to new digital technologies. (See main story.) What might be called physical technologies—things like robots and drones that take the place of and/or work alongside human workers—are increasingly being explored and implemented. Robots are usually deployed to

reduce costs and are

sometimes demonized for eliminating human jobs. But in this day and age of effectively full employment logistics

eliminate the need for a person as well as human error.” Automating the picking operation also facilitates the requirements for quick — increasingly, same day e-commerce deliveries “If you don’t have an automated robotic picking scenario it’s hard to get the job done fast enough,” said Schoenfeld. Drones once excited the logistics industry for the prospects of their performing last-mile deliveries— and some companies are still working on that. But most now feel that drones show the most

“The No. 1 thing we try to solve every day is labor utilization.”

-- Mike Schoenfeld, DB Schenker.

companies are experiencing labor shortages. Robots are increasingly being utilized to perform tasks for which humans are simply not available. “The No. 1 thing we try to solve every day is labor utilization,” said Mike Schoenfeld, senior vice president and head of contract logistics in the US for DB Schenker. “We want to be able to swap out a piece of equipment for human labor. If we can acquire an automated reach truck, we can eliminate three different people from the payroll in a 24-hour operation.” Robots also help with warehouse safety, Schoenfeld noted. “Where there are fewer bodies,” he said, “less people will get injured.” Robotics are being deployed in warehouse pick operations, and DB Schenker is starting to pilot technology developed for the pharmaceuticals industry. “Robots are pulling meds from cells and sorting and counting them,” said Schoenfeld. “In these smaller controlled environments, robots can

potential for working inside large distribution centers, peering at items stacked very high for the sake of inspection and inventory control. They are also starting to be used for yard operations, noted Schoenfeld, to automate accounting for trailers. Ultimately, 3PLs view the ideal situation as having robots and humans working side by side. “The 3PL value proposition has always been to help clients with flexibility, to deal with unexpected surges and other special needs,” said Schoenfeld. “Ultimately that

translates to

throwing people at the job.” Ramping up for a surge with additional human resources also implies

when the surge is over. That doesn’t work

with that can’t robots

because they represent capital investments


allowed to sit idle. That certainly points to the value of human labor but also to a paradox of these full-employment times— that you have to have the human labor to deploy. – Peter Buxbaum

ramping down

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