To survive in this volatile business environment, third-party logistics providers and their customers must work together to build up their digital capabilities and talents while also focusing on meeting the end customer’s needs.
C. John Langley Jr. (johnlangley11@gmail.com), Ph.D., is a professor at Penn State University’s Smeal College of Business and the Department of Supply Chain and Information Systems, and founder of the “Annual Third-Party Logistics Study.”
Effectively matching supply and demand has always been challenging, but the current volatility in many supply chains has made it even harder, creating new and unique problems. Companies desperately need innovative and improved solutions to deal with supply chain complexity and create agility and responsiveness.
One key facilitator of success will be the ability of supply chain partners to be well-aligned and to optimize the capabilities of each partner within the network. Now in its 27th year, our “Annual Third-Party Logistics Study” has time and again shown the benefits of working with logistics service providers to navigate market uncertainties and achieve overall success for the supply chain.
High-level research results from this year’s study indicate three key focus areas for strengthening relationships between third-party logistics providers (3PLs) and their customers: 1) the ability to collaborate in the interest of creating value for customers and consumers, 2) the ability to create insight through digitization and analytics, and 3) the critical need for talent. (A broader and more detailed summary of the research will be presented at the CSCMP EDGE Conference in Nashville, Tennessee, on September 19.)
Creating value for the end customer
For 3PLs and shippers to have a successful relationship, both parties need to understand the overall supply chain goals and use this knowledge to create effective working relationships.
As the primary flows of products and services in supply chains are downstream toward the eventual consumers and business customers, the supply chain’s most important priorities should be related to satisfying demand and creating value for these parties.
Ideally, then, all participating supply chain organizations, including 3PLs, should have some understanding of demand patterns at the customer/consumer level that are driving requirements for the overall supply chain. One way to achieve this is by sharing available forecast and demand planning information relating to the needs of customers and consumers.
The best results are achieved when both 3PLs and their customers are working with accurate information and are well-aligned on goals, objectives, and working relationships. 3PLs and customers must also be aware of factors that may impact the ability of supply chains to meet these overall objectives. Partners should be willing to share information on potential problems and issues—these could range from a shortage of transportation capacity to unexpected volatility in the availability of needed materials and supplies.
Digitization and analytics
For many years, our “Annual Third-Party Logistics Study” has documented that shippers view IT capabilities as an essential element of their 3PLs’ expertise. That sense has intensified over the past year as 74% of customers participating in this year’s study noted that technology plays a greater role in their 3PL partnership than it did just three years ago.
Furthermore, what customers are looking for in terms of that expertise has evolved and become more sophisticated. One question for shippers that is asked in each of our yearly studies is, “Which technologies, systems, or tools are ‘must haves’ for a 3PL to successfully serve a customer in your industry?” Figure 1 compares the results from this year’s study to those of the prior year. This figure also indicates the percentages of participating 3PLs that indicate those capabilities are currently available.
[Figure 1] Importance of IT capabilities in shipper-3PL relationships Enlarge this image
While more traditional execution and transactional software—such as transportation management systems and warehouse management systems—continue to rank highly, there was a growing importance expressed for the availability of digital and analytical technologies. (In the interest of clarity, digitization refers to the conversion of information to a digital format, and analytics refers to the use of mathematical and statistical approaches to help solve problems intelligently using digital data.) A related finding from last year’s study is that 64% of customers noted that they were investing in intelligent data analytics. While there are some variations in year-over-year data, Figure 1 indicates there is a continued or growing interest in advanced analytics and data mining, warehouse automation, and global trade management solutions.
Findings from this year’s study indicate that this shift in focus toward digitization and analytics will continue to be of great importance for 3PLs as well. Referring to Figure 1, 54% of 3PLs reported having capabilities in the areas of advanced analytics and data mining tools. However, gaps are noted in the areas of automation and global trade management solutions.
We believe that to deal successfully with future supply chain challenges, 3PLs and their customers will require significant dedication to digitization and the use of analytics. Coupled with wisdom and experience, these analytical tools will facilitate the development of complex solutions to problems faced both individually by 3PLs and their customers, as well as those problems they face in collaboration.
Talent
The need for and availability of talent in supply chains have become critical issues for many organizations. This includes both shippers and 3PLs. Almost 80% of shippers stated that labor shortages have impacted their supply chain operations, and 56% of 3PLs stated that labor shortages have impacted their ability to meet customer service-level agreements (SLAs). In particular, roughly two-thirds of all respondents to the “27th Annual Third-Party Logistics Study” survey noted that recruiting and retaining both hourly and certified/licensed/skilled hourly workers is an area that they are struggling with and believe they will continue to struggle with for some time.
But retention challenges are not limited to hourly employees. Bloomberg, in the spring of 2022, reported that supply chain managers have been quitting their jobs at the highest rate since at least 2016.1} This assertion was based on calculations performed by LinkedIn. Each month, the website analyzes the number of people who left their job in the past month and then compares that number to a baseline average from 2016. The average “separation rate” for 2020–2021 for supply chain managers was 28%, the highest in the five years since the company started tracking this data. According to the article, factors for these turnovers include burnout, desire for increased compensation, and demand for experienced supply chain managers to solve supply chain problems at nontraditional supply chain organizations.
Further complicating the recruitment and retention challenges is the fact that supply chain roles are evolving quickly, and the skills and talents needed today are different than they were just a few years ago. For example, supply chains are increasingly becoming data-driven, and the need for real-time visibility continues to grow. As a result, skills related to data analytics and digital technologies are vital and in high demand.
Meeting the rising challenge
The success of 3PL–customer relationships always boils down to their ability to create value for their customers and their businesses, as well as for consumers and end customers. But as disruption and complexity increase, effectively meeting those needs has become even harder.
In response, 3PLs and their customers will need to work together to enhance their agility and responsiveness. Technology, data, and analytics certainly will help supply chain practitioners meet these shifting needs and implement new and innovative supply chain strategies. In addition, both 3PLs and their customers will need to ensure that they have the right people with the right skills and talents. 3PLs and customers will need to work together to establish technology and talent-acquisitions strategies that complement each other, as they work to create more resilient and effective supply chains.
Supply chains are poised for accelerated adoption of mobile robots and drones as those technologies mature and companies focus on implementing artificial intelligence (AI) and automation across their logistics operations.
That’s according to data from Gartner’s Hype Cycle for Mobile Robots and Drones, released this week. The report shows that several mobile robotics technologies will mature over the next two to five years, and also identifies breakthrough and rising technologies set to have an impact further out.
Gartner’s Hype Cycle is a graphical depiction of a common pattern that arises with each new technology or innovation through five phases of maturity and adoption. Chief supply chain officers can use the research to find robotic solutions that meet their needs, according to Gartner.
Gartner, Inc.
The mobile robotic technologies set to mature over the next two to five years are: collaborative in-aisle picking robots, light-cargo delivery robots, autonomous mobile robots (AMRs) for transport, mobile robotic goods-to-person systems, and robotic cube storage systems.
“As organizations look to further improve logistic operations, support automation and augment humans in various jobs, supply chain leaders have turned to mobile robots to support their strategy,” Dwight Klappich, VP analyst and Gartner fellow with the Gartner Supply Chain practice, said in a statement announcing the findings. “Mobile robots are continuing to evolve, becoming more powerful and practical, thus paving the way for continued technology innovation.”
Technologies that are on the rise include autonomous data collection and inspection technologies, which are expected to deliver benefits over the next five to 10 years. These include solutions like indoor-flying drones, which utilize AI-enabled vision or RFID to help with time-consuming inventory management, inspection, and surveillance tasks. The technology can also alleviate safety concerns that arise in warehouses, such as workers counting inventory in hard-to-reach places.
“Automating labor-intensive tasks can provide notable benefits,” Klappich said. “With AI capabilities increasingly embedded in mobile robots and drones, the potential to function unaided and adapt to environments will make it possible to support a growing number of use cases.”
Humanoid robots—which resemble the human body in shape—are among the technologies in the breakthrough stage, meaning that they are expected to have a transformational effect on supply chains, but their mainstream adoption could take 10 years or more.
“For supply chains with high-volume and predictable processes, humanoid robots have the potential to enhance or supplement the supply chain workforce,” Klappich also said. “However, while the pace of innovation is encouraging, the industry is years away from general-purpose humanoid robots being used in more complex retail and industrial environments.”
An eight-year veteran of the Georgia company, Hakala will begin his new role on January 1, when the current CEO, Tero Peltomäki, will retire after a long and noteworthy career, continuing as a member of the board of directors, Cimcorp said.
According to Hakala, automation is an inevitable course in Cimcorp’s core sectors, and the company’s end-to-end capabilities will be crucial for clients’ success. In the past, both the tire and grocery retail industries have automated individual machines and parts of their operations. In recent years, automation has spread throughout the facilities, as companies want to be able to see their entire operation with one look, utilize analytics, optimize processes, and lead with data.
“Cimcorp has always grown by starting small in the new business segments. We’ve created one solution first, and as we’ve gained more knowledge of our clients’ challenges, we have been able to expand,” Hakala said in a release. “In every phase, we aim to bring our experience to the table and even challenge the client’s initial perspective. We are interested in what our client does and how it could be done better and more efficiently.”
Although many shoppers will
return to physical stores this holiday season, online shopping remains a driving force behind peak-season shipping challenges, especially when it comes to the last mile. Consumers still want fast, free shipping if they can get it—without any delays or disruptions to their holiday deliveries.
One disruptor that gets a lot of headlines this time of year is package theft—committed by so-called “porch pirates.” These are thieves who snatch parcels from front stairs, side porches, and driveways in neighborhoods across the country. The problem adds up to billions of dollars in stolen merchandise each year—not to mention headaches for shippers, parcel delivery companies, and, of course, consumers.
Given the scope of the problem, it’s no wonder online shoppers are worried about it—especially during holiday season. In its annual report on package theft trends, released in October, the
security-focused research and product review firm Security.org found that:
17% of Americans had a package stolen in the past three months, with the typical stolen parcel worth about $50. Some 44% said they’d had a package taken at some point in their life.
Package thieves poached more than $8 billion in merchandise over the past year.
18% of adults said they’d had a package stolen that contained a gift for someone else.
Ahead of the holiday season, 88% of adults said they were worried about theft of online purchases, with more than a quarter saying they were “extremely” or “very” concerned.
But it doesn’t have to be that way. There are some low-tech steps consumers can take to help guard against porch piracy along with some high-tech logistics-focused innovations in the pipeline that can protect deliveries in the last mile. First, some common-sense advice on avoiding package theft from the Security.org research:
Install a doorbell camera, which is a relatively low-cost deterrent.
Bring packages inside promptly or arrange to have them delivered to a secure location if no one will be at home.
Consider using click-and-collect options when possible.
If the retailer allows you to specify delivery-time windows, consider doing so to avoid having packages sit outside for extended periods.
These steps may sound basic, but they are by no means a given: Fewer than half of Americans consider the timing of deliveries, less than a third have a doorbell camera, and nearly one-fifth take no precautions to prevent package theft, according to the research.
Tech vendors are stepping up to help. One example is
Arrive AI, which develops smart mailboxes for last-mile delivery and pickup. The company says its Mailbox-as-a-Service (MaaS) platform will revolutionize the last mile by building a network of parcel-storage boxes that can be accessed by people, drones, or robots. In a nutshell: Packages are placed into a weatherproof box via drone, robot, driverless carrier, or traditional delivery method—and no one other than the rightful owner can access it.
Although the platform is still in development, the company already offers solutions for business clients looking to secure high-value deliveries and sensitive shipments. The health-care industry is one example: Arrive AI offers secure drone delivery of medical supplies, prescriptions, lab samples, and the like to hospitals and other health-care facilities. The platform provides real-time tracking, chain-of-custody controls, and theft-prevention features. Arrive is conducting short-term deployments between logistics companies and health-care partners now, according to a company spokesperson.
The MaaS solution has a pretty high cool factor. And the common-sense best practices just seem like solid advice. Maybe combining both is the key to a more secure last mile—during peak shipping season and throughout the year as well.
The Boston-based enterprise software vendor Board has acquired the California company Prevedere, a provider of predictive planning technology, saying the move will integrate internal performance metrics with external economic intelligence.
According to Board, the combined technologies will integrate millions of external data points—ranging from macroeconomic indicators to AI-driven predictive models—to help companies build predictive models for critical planning needs, cutting costs by reducing inventory excess and optimizing logistics in response to global trade dynamics.
That is particularly valuable in today’s rapidly changing markets, where companies face evolving customer preferences and economic shifts, the company said. “Our customers spend significant time analyzing internal data but often lack visibility into how external factors might impact their planning,” Jeff Casale, CEO of Board, said in a release. “By integrating Prevedere, we eliminate those blind spots, equipping executives with a complete view of their operating environment. This empowers them to respond dynamically to market changes and make informed decisions that drive competitive advantage.”
Material handling automation provider Vecna Robotics today named Karl Iagnemma as its new CEO and announced $14.5 million in additional funding from existing investors, the Waltham, Massachusetts firm said.
The fresh funding is earmarked to accelerate technology and product enhancements to address the automation needs of operators in automotive, general manufacturing, and high-volume warehousing.
Iagnemma comes to the company after roles as an MIT researcher and inventor, and with leadership titles including co-founder and CEO of autonomous vehicle technology company nuTonomy. The tier 1 supplier Aptiv acquired Aptiv in 2017 for $450 million, and named Iagnemma as founding CEO of Motional, its $4 billion robotaxi joint venture with automaker Hyundai Motor Group.
“Automation in logistics today is similar to the current state of robotaxis, in that there is a massive market opportunity but little market penetration,” Iagnemma said in a release. “I join Vecna Robotics at an inflection point in the material handling market, where operators are poised to adopt automation at scale. Vecna is uniquely positioned to shape the market with state-of-the-art technology and products that are easy to purchase, deploy, and operate reliably across many different workflows.”