In July of 2021, UPS President of Supply Chain Solutions, Phillippe Gilbert, held a discussion with DHL CCO and Strategy Director, Phil Roe, regarding the future of third-party logistics. Their discussion looked at where the 3PL industry is today and where it is likely headed throughout the year. DHL and UPS executives examined the evolution of 3PL in 2021 and provided numerous insights and predictions during the conversation.
When it comes to the fundamental benefits of partnering with a third-party logistics provider, both executives agreed that efficiency was high on the list. Another crucial point was the importance of having many 3PL providers across multiple jurisdictions. The right 3PL provider could have a presence where each member of the supply chain is located.
The discussion also covered how 3PL providers could be an asset when it comes to industry-wide disruptions. Unlike disruptions that occur on either the supply-side or the demand-side, major environmental disruptions – like a pandemic or Brexit, for example – can be difficult for a company to manage on its own.
The reach of a 3PL provider can be a great advantage, according to Roe. He explained that DHL made the most of their large network. The company leveraged its assets to redeploy them on demand in response to major disruptions. For example, DHL adopted new supply chain solutions to ensure British clients were able to keep up with their inventory during Brexit.
The story of 2020 was about the rapid growth of e-commerce. Gilbert and Roe discussed what they expect from e-commerce in the months to come. They agreed that many consumer habits brought on by the COVID-19 pandemic have resulted in permanent changes. Consumers who had rarely, if ever, relied on online shopping prior to 2020 are likely to continue doing so when the pandemic ends.
The months leading up to and including the pandemic saw an increase of over 150% in DHL’s fulfilment division. To accommodate this demand, the company has focused on automation and data to simplify their processes. Their efforts have included implementing automated pallet systems, as well as robots to pick and pack products prior to shipping.
Gilbert also discussed how consumer expectations have shifted in recent years. Large retailers like Amazon have set customers’ expectations for next-day delivery with most items. To compete, Gilbert suggests that 3PL providers expand their networks and integrate fulfillment with last-mile delivery.
Gilbert and Roe also recommended relying on technology to increase efficiency and efficacy. Everything from machine learning to predictive analytics could be used by 3PL providers to speed up the fulfillment process.
The executives also discussed the role that 3PLs could play in addressing social commitments like reducing carbon emissions. Gilbert discussed UPS’ Eco-Responsible Packing Program, which allows the company to evaluate customers’ packing systems and help them identify ways to protect their products as well as the environment.
To Gilbert and Roe, the future looks bright for 3PL providers. They suspect 3PL providers will expand and work toward mastering multiple channels of e-commerce. To learn how the team at Brown West could help you solve your supply chain challenges, contact us right away.