With e-commerce, end consumers are more and more demanding in their quest for new experiences and new services. The physical product no longer offers a strong enough competitive edge. That is why many companies are focusing on logistics to stand out and build customer loyalty. But just how can you play your cards right? Here are some of the challenges you have to face if you want to stay in the race.

A major market upheaval 

Amazon, an expert in disruption

Logistics is a key factor, and Amazon has understood this since 2005 when it launched its service Amazon Prime: a subscription-based service that offers free delivery in a maximum of two days’ time. In late 2014, the online retail giant once again threw out the rule book with its Prime Now, a service offered in large cities that guarantees delivery in 1 hour on a selection of products.

Result: disruption in a market already turned upside down by the rise of e-commerce. To stay in the race, the only solution is to entirely rethink the way retailers operate, and this does not come without difficulties. Changes to store setup and distribution channels, new purchasing habits: so many levers to activate and habits to adopt if you want to stay afloat.

Read also: 5 strategic priorities for retailers in 2018
 

3PL, an urgent solution

Not only are projects more numerous but a sense of urgency has settled in in the sector as a result of its economic boom. With global outsourced logistics services amounting to 802 billion dollars in 2016, Armstrong & Associates consulting firm estimate 1.1 trillion by 2022. It thus becomes very difficult, even impossible, to process all projects internally and fulfil an increasingly growing demand. 

That is why retailers are relying on 3PLs (third party logistics) to operate these profound logistic changes. Positioned at the heart of prime contractors’ strategic activities, a determining factor of customer loyalty, 3PLs must also revamp their warehouse and transport management processes. Goal: offer a new positioning.

On the same topic: 2 key indicators for a better managed warehouse

Supply Chain and leading industries: the same battle?

With the market upheavals, the Supply Chain is being taken up a notch and resembles more closely the logistics of leading industries. The stakes? Growing consumer demand in terms of traceability and order security. 

Implementing ever more precise solutions, comparable to those used in leading industries, is essential. What’s even worse is that unlike industrial logistics, orders managed by 3PLs cannot be accurately predicted. Supply management is thus a strategy for offering efficient service and preventing hazards.

Further reading: Blockchain: a guarantee of more traceability

4 major challenges for 3PLs

Within this context of growing mobility and compulsory reorganization, 3PLs are faced with 4 major challenges:

1. Proximity. Looking for a strong partner between retailer and 3PL means limiting the number of logistics service providers in order to guarantee their proper integration into IT systems and smooth business relations. 
    
2. Flexibility and managing uncertainty. Working in an ever changing environment, 3PLs are used to being responsive and managing uncertainty to simultaneously meet the demands of several customers. A real added value for retailers who must respond to real-time demands.
    
3. Last-mile delivery. Traffic, pedestrians, urban environmental policy, and  customer gratitude make delivering goods in cities more difficult and force delivery drivers to constantly reorganize their routes.  This is a factor that 3PLs must take into account if they want to offer the most efficient logistic services and respect the demands of all actors (customers, retailers, law makers, etc.).
    
4. An arms race. To ensure profitable and durable activity, 3PLs must optimize, on an ongoing basis, their operating methods, most notably by simplifying how clients understand their solutions on the market.  To do this, offering complete and tailored packaged solutions is a good method to consider.

Expected to meet ever changing needs, 3PLs must demonstrate inventiveness in order to satisfy their customers. Equipping themselves with software solutions that enable them to optimize logistics services and offer added-value services is essential if they want to stand out from the crowd. Aware of these challenges, Generix Group strives to offer its 3PL partners the best solutions possible. To find out more, contact our Supply Chain experts!  

Image credit: Flickr Creative Commons – Tech in Asia