Gartner® Hype Cycle™ for Retail Technologies, 2024
Read the report
Third-party logistics providers (3PLs) are facing more pressure than ever before to deliver for their customers. Service Level Agreements (SLAs) like next-day and same-day delivery are becoming the norm, and these demands decrease the room for error in the warehouse. To tackle today’s challenges, 3PLs need every automation advantage they can get. We sat down with Ashish Bindal, Vice President of Sales at GreyOrange, to find out what’s keeping 3PL executives up at night and the automation trends and solutions that can help.
If you look at any 3PL operation, you will find that most inefficiencies are caused by a lack of information where and when it’s needed. There’s so much information in a warehouse coming from disparate systems and, more often than not, that data is not available to operators. And even when it is, it’s usually only available after a lag.
I was in a warehouse earlier this week where the supervisor didn’t know about the productivity of an operator in their warehouse until the next day. In these scenarios, supervisors can’t have a positive impact while operations are happening, which prevents them from taking the correct action at the right time. Automation solutions provide information the instant it’s available to the system, in real time.
The future of 3PLs will be decided by their ability to provide their services at time, speed and cost efficiencies to their customers. In the last five years, we’ve seen that the 3PLs that adopt technologies like flexible automation are the ones who are ahead of their peers and shaping that future. Labor shortages have sped up this process, and the market share for 3PLs that have not adopted technology is going down by the day. Customers are keen to bet their future on partners that use automation over the ones that just offer the same manual service that they’ve been using for the past 20 years.
RELATED READ: Finding Space to Grow: The 3 Strategies Helping 3PLs Sustain Market Momentum
GreyOrange looks at companies from an application and operations perspective – we do not look at operations from a point-to-point perspective. Our goal is to enable 3PLs to adopt any automation that they need to gain a competitive edge. Along with our partners, GreyOrange has multiple robotic technologies that can automate any process for a 3PL.
Over the last five years, GreyOrange has worked with 3PLs across the globe, and most seem to follow a crawl, walk, run journey. They start slow and then scale up as they need to. Since the GreyOrange approach is flexible automation, which enables 3PLs to grow as needed, this approach has been widely accepted by customers and has accelerated their growth.
3PLs do business based on their customers’ needs, and their end customers’ businesses are seasonal. Typically, 3PLs face six to twelve weeks of peak depending on what kind of specific customers they serve, and most 3PLs fail in the peak 80% of the time.
Here, we would provide a flexible automation solution that allows 3PLs to scale up and down on robots or hardware based on demand. Instead of needing to invest in a robust or gigantic system, they can remain lean for most of the year and then rent what they need from GreyOrange when they need additional capacity. Then, when peak season ends, they could return those robots and go back to business as usual. Our solutions are tailor-made to meet the elastic demands of 3PLs and their end customers.
Robotics and automation are not seen as part of ROI by end customers. Today, end customers view these as an insurance plan proving that a 3PL can deliver on its promises. The traditional approach has been to use people to ensure that the end customer’s needs are met, but the shortage of labor in the industry has made it less likely for those customers to believe that a 3PL can hold up its end of the deal without technology.
When 3PLs adopt automation and robotics, they have a much higher chance of successfully winning business because end customers are more likely to trust them with their inventory. We’ve seen that 3PLs that adopt automation with us tend to get longer-term contracts in comparison to 3PLs that stick to manual operations. The ones that use automation get contracts that average five years, whereas the average contract in the industry is three years, so 3PLs that implement robotics and automation tend to get 60% longer contracts than those that don’t.
When 3PLs adopt automation and robotics, they have a much higher chance of successfully winning business because end customers are more likely to trust them with their inventory.
Like any technology, automation is evolving, and it will continue to evolve as time goes on. What this means is that multiple solutions will emerge, and they’ll tend to specialize in solving particular scenarios or streamlining specific processes for 3PLs. As a result, 3PLs will have to adopt different robotic solutions from multiple suppliers to get the best of everything. An open system will allow 3PLs to use those systems together in an efficient manner – a good WS platform will ensure that those solutions and technologies are interoperable.
In the past, when 3PLs buy proprietary systems, they haven’t gotten the results they wanted because, while they might be great at solving one problem, they don’t collaborate or provide any additional value to other processes in the warehouse. With an open platform, multiple outputs and inputs from various systems can support each other and, in the end, provide a more efficient fulfillment system than a standalone process could.