How Can 3PLs Keep Up With Rising Demand?

Investing in additional automation is the obvious route for 3PLs to take to meet the high volume and rapid turnarounds requirements of e-commerce sales.

Buying patterns changed dramatically during COVID-19 as consumers chose to purchase many more products online versus in-store. This massive and previously unexpected shift towards e-commerce sales looks likely to remain in place post-pandemic. Third-party logistics (3PL) providers find themselves and their facilities under increasing pressure to keep up with the ongoing explosive e-commerce growth while reducing the impact of labor shortages that plague the industry.

Investing in additional automation is the obvious route for 3PLs to take to meet the high volume and rapid turnarounds requirements of e-commerce sales. Traditionally, 3PLs might look to fixed automation solutions or goods-to-person (G2P) systems to help make their operations more efficient. However, both options can prove inherently limiting especially to 3PLs, potentially putting constraints on their future growth.

Investing in a piece of fixed automation equipment such as unit sortation systems or automated storage and retrieval systems (AS/RS) may meet the needs of a single customer at a fixed point in time. However, it may not be a good fit for the 3PL’s other clients whether now or in the future. Installing a G2P system, where shelves of goods are delivered to stationery pickers by Automated Guided Vehicles (AGVs), takes time and can cause disruption to a 3PL’s operations during implementation. The G2P system also only addresses fast-moving inventory that fits in the cubbies of the shelves of goods. Both fixed automation and G2P represent sizable upfront and long-term investments which may then take years for 3PLs to realize payback.

Today’s 3PLs don’t have the time and can’t afford to make structural alterations to their distribution centers that are not easily changed. Such alterations would then limit their capacity and order mix and/or lock them into a particular operations type. Today’s 3PLs need to handle orders of all types: fast- and slow-moving e-commerce of all sizes, weights, and shapes all the way up to cases and pallets. Their customers have unique needs at different times from each other and that customer mix is fluid. A key takeaway 3PLs have absorbed during the pandemic is that they must be able to quickly adapt to unanticipated market change, which may occur at any time.

Flexible automation is a great approach for 3PLs since it allows them to make changes at their own pace, either in expectation of shifts in customer requirements or as a direct response to new customer needs. For 3PLs, the most appealing and easy-to-adopt flexible automation solution is a fleet of Autonomous Mobile Robots (AMRs), which gives them the ability to change automation workflows. A 3PL can rapidly deploy the AMRs, potentially in under a week, and easily reconfigure the robots to meet the needs of different customers, now or in the future.

For those 3PLs eager to scale their usage of AMRs to meet seasonal shifts in customer demand or change the type of AMRs in use in their facilities, the Robots as a Service (RaaS) business model offered by some flexible automation providers may prove compelling. AMRs don’t require permanent or semi-permanent alterations to be made to 3PL facilities in order to operate.

Any 3PL can potentially benefit from using AMRs. The key is for each 3PL to decide what represents the best current fit for their facilities in adopting flexible automation, whether targeting a single workflow or multiple workflows. Unlike traditional automation, nothing that the 3PL does with a fleet of AMRs is set in stone and the current way of using the robots can be easily changed.

To ensure maximum efficiency and to avoid taking on additional IT management responsibilities, 3PLs should consider working with only a very small number of AMR solution providers. The robots the 3PLs choose should come in a variety of form factors and be able to multitask. In other words, the robots can execute a variety of workflows including order picking, batch picking, case picking, pallet picking, and kitting as well as material movement such as transport from picking to put walls and/or packing areas, recycling removal, value-added services (VAS), and returns. A 3PL could then have the same robot carry out one function for one customer on a morning shift and then switch to a different function for another customer on the afternoon shift.

Every 3PL realizes that today’s e-commerce sales may never ever return to pre-COVID-19 levels. Experts believe the vast majority, 94%, of U.S. consumers, will continue to buy the same amount or even more products online once the pandemic finally subsides. Flexible automation via AMRs and RaaS represents the optimal solution for 3PLs to keep pace with e-commerce volume and to best serve the unique requirements of their current and future customers.

Achieving scalability, adaptability, and agility are the drivers for successful 3PLs and flexible automation is the best route for them to take to ensure ongoing success amid continual uncertainty.

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