As I discussed in a previous blog, more retailers and manufacturers are turning to logistics services providers (LSPs) to manage their growing warehousing and transportation challenges — including rising costs, shrinking margins, labor shortages, and increasing customer demands. By applying advanced technologies and associated best practices to optimize operations, LSPs are helping retailers and manufacturers achieve a faster, higher return on their logistics investments.
What exactly are the leading LSPs getting right today? And what lessons can retailers and manufacturers learn from them to improve their own operations? This topic was highlighted during a recent webcast sponsored by Blue Yonder called “Fast Tracking ROI: Agile Logistics Through Automation, AI and Optimization.”
Hosted by Brian Straight, Editor-in-Chief of Supply Chain Management Review, the event brought together three logistics experts: Kristi Montgomery, VP for Innovation, Research and Development at Kenco Logistics; Travis Eide, Research Director for Global Supply Chain, Transportation, at IDC; and Nafe Hagen, 3PL Global Solutions Leader for Blue Yonder.
These panelists discussed how leading LSPs are leveraging advanced technology to address today’s “perfect storm” of demand volatility, cost pressures, talent shortages, increased competition, and rising customer expectations. Here’s a look at three strategies LSPs are leveraging in their work with customers.
Automation: Controlling Costs While Improving Service
In today’s environment of shrinking margins, our panelists agreed that automation is a key enabler of minimizing costs, while also maximizing accuracy, efficiency and customer service. In driving innovation at Kenco, a leading 3PL, Montgomery has seen firsthand the value of automation.
“Digitizing backend processes is really key,” she noted. “Manual entry and manual capture of data are prone to error and accuracy challenges. Our goal is to eliminate a lot of that repetitive, redundant work that people don’t want to do anyway. We find a lot of productivity gains there, but also there’s also the benefit of lowering costs and increasing accuracy. For us, technology has been a driver of automating our customers’ supply chains, so processes can be a lot quicker and a lot more agile.”
Mongomery stressed that Kenco’s goal is not to eliminate human workers, but to make their work more value-added and strategic. “I think our customers agree that automation is a way to augment our human workforce. We’re really trying to help our human workforce be more efficient, be more engaged with their jobs and, quite frankly, be happier with what they’re doing,” said Montgomery.
Eide has also witnessed the value of automation. “At IDC, what we’re talking about is the importance of getting rid of that paper paradigm. Digitizing processes and information aren’t enough,” he stressed. “You need to change the process, rethink the workflow to become more efficient. And that’s really the key behind driving advanced technology into the supply chain. What problems can automation solve? What business results are delivered by letting a machine do the work? Historically, process automation was viewed as a support function, not an opportunity center. Now companies are realizing that automation can drive a better customer experience.”
Every day, Hagen works with LSPs, retailers and manufacturers who leverage Blue Yonder solutions to increase automation. “Many companies are looking to achieve the right mix of automation to create efficiencies, optimization, and productivity,” Hagen stated. “Advanced technology is enabling and unlocking value for the operation that we weren’t able to think about even three or five years ago. Automation can be something in the warehouse, or it can be something beyond simply the four walls to the yard, and beyond. There are a lot of options that allow you to deploy automation in cost-effective ways that make strategic sense. And the cost of entry is coming way down.”
Artificial Intelligence: Making Faster, More Accurate Decisions
The panelists also agreed that artificial intelligence (AI) and machine learning (ML) are generating enormous value. Once considered futuristic, today these technologies are driving practical results and financial benefits for both LSPs and their partners.
“AI and ML are hot topics for our customers,” Montgomery remarked. “We’re finding a lot of value in increasing predictability in the supply chain. We have customers who struggle predicting demand and telling us what they’re going to be shipping to us next week. And for us to be able to apply a machine learning (ML) model to that, and determine that shipping volume within a 1% accuracy, that allows us to better plan for labor. It allows us to be better prepared for space in the warehouse. It allows us to have our transportation lined up to handle inbound movements and outbound shipments.”
Eide believes that AI and ML are critical in navigating disruption. “With today’s speed of change, what you planned for this morning may not be relevant now,” he pointed out. “As things change and materialize in the operational landscape, you want to be able to adapt to those continuously. And that’s what AI and ML ultimately deliver to your organization — the ability to do that quickly, accurately, and consistently across your operations. From load planning to network optimization, improving transparency and collaboration, to communication with your supply chain partners, all of that is enabled with AI.”
Process Optimization: Realizing Results Quickly
Hagen emphasized that process optimization is also delivering financial returns for Blue Yonder customers, whether LSPs, retailers or manufacturers.
“Companies want to incorporate best practices. They want to apply thought leadership,” said Hagen. “Today advanced technology is enabling that at a new speed, versus historically when it took six, nine or 12 months for software deployment.”
“Today companies are looking at technology just a little bit differently, in part because of the world of SaaS,” he explained. “Today we have customers that are saying, can you bring to the table an industry best practice template for hardlines or grocery operations? We deliver templates that enable them to start to receive, pick, pack, and ship. They can turn on those foundational processes and then unlock additional benefits of the solution, whether that’s advanced transportation optimization or load building as they need to in the future. Companies want to get up and running quickly, and the technology is there now to support it.”
Driving ROI by Strategically Applying Technology
Montgomery pointed out that, while advanced technology can drive a rapid return on logistics investments, in the end it needs to be applied in a strategic, results-oriented manner.
“A lot of times, introducing technology for the sake of technology drives more chaos into the process,” she stated. “If you’re taking a look at your processes as you’re adding digital technology, then how the data’s going to flow, how the people are going to work, how automation is going to work — really looking at that holistic picture — that’s how you’re going to find your best gains and your best optimization. It’s about the process at the end of the day, and you’ve got to look at that holistically.”
I encourage you to watch the full webcast to learn more insights from our panel of logistics experts. I hope you’ll be excited by how advanced technology is already transforming the logistics landscape — and inspired by what the future holds, as more companies embrace the innovations and best practices of leading LSPs.