The companies we know today as third-party logistics (3PL) providers have been around for about 40 years. 3PL services came about in the 1980s as companies that traditionally only offered warehousing and storage services began leveraging a rapidly growing transportation sector to expand their services. This model grew over the next few decades as 3PLs began to take on more supply chain responsibilities from their shipper customers.
Since then, 3PLs have continued their steady expansion of services. Logistics providers today not only handle transportation brokerage, warehousing, fulfillment, logistics, and more for their customers, but many do so by leveraging advanced warehouse automation technologies that streamline processes and solve problems that shippers may struggle to handle on their own.
Tried-and-true warehouse automation solutions have helped many 3PLs stand apart from their competitors, especially during periods of economic uncertainty, when shippers must be careful with how they spend constrained budgets. When a shipper invests in warehouse automation, they have to cover the upfront costs alone. When a 3PL makes that investment, those costs are built into its rates and spread across the provider’s full client portfolio, so shippers can benefit from the efficiencies it drives at a fixed cost.
“There is a lot of buzz and hype around artificial intelligence right now, but there are many new and existing technologies that are reshaping the way 3PLs operate,” says Frank Crivello, founder and chairman of Milwaukee-based Phoenix Investors. “The people who invented some of the long-standing warehouse solutions wouldn’t even recognize their modern counterparts, given how far they’ve come. When you pair these latest iterations with newer options like robotics and, of course, AI, you really increase the level of service you can offer to a shipper.”
Here are some of the top technologies 3PLs are using today to boost resilience and efficiency for their shipper partners.
1. Automated Storage and Retrieval Systems (AS/RS)
AS/RS solutions place inventory in specified storage locations and retrieve it when instructed. This technology is not new, with some versions dating back to the 1960s or earlier. Until recently, these systems involved installing large, fixed single-lane installations with cranes that would recover pallets or storage containers. However, the most recent versions are much faster. Even better, they are typically modular, which lets them handle a much wider range of SKUs. They also incorporate racking systems that optimize vertical space in conjunction with automated loaders and robotic shuttles to add, remove, and store goods.
The flexibility of these recent designs makes them ideal for a 3PL warehouse, where inventory may come in a vast range of sizes and shapes. Additionally, it allows 3PLs to assign warehouse associates to more advanced tasks, since they aren’t spending all their time walking back and forth to find and pick items.
2. Automated Warehouse Robots
The warehousing sector has come a long way from the first robots that followed predetermined paths that had to be fenced off to keep them from running into people, forklifts, and infrastructure. 3PL warehouse automation now often incorporates a wide variety of robotics, depending on the needs of the facility and the customers it serves. Some of the most common types of robots include:
- Goods-to-person (G2P) robots bring the inventory directly to a human packer, usually by retrieving a bin or pallet from a rack.
- Collaborative robots, often shortened to “cobots,” are purpose-built to work in tandem with human employees. The most common models contain storage bins that follow a human picker as they pick items for packing.
- Inventory drones fly around the warehouse scanning barcodes or RFID tags to provide near real-time inventory data.
- Sorting robots are designed to route packed goods to chutes or conveyor belts, usually based on either their destination or on size/weight.
- Pallet robots quickly palletize and wrap pallets for shipment, or conversely, unwrap and unpack them when received.
These robots ultimately help 3PLs drive efficiencies in the warehouse, helping providers reduce strain on warehouse laborers and meet or exceed target KPIs for customers.
3. Warehouse Management Systems (WMS)
Like AS/RS, WMS is not a new technology, but the age of the system a 3PL uses can drastically change its value. Older systems usually require on-premise servers, which also means they need dedicated IT resources to maintain them. They update in batches, which means the most current inventory data is often days old. Similarly, orders are often processed in waves, meaning the time between order placement and the start of fulfillment activity could take hours or days.
Modern WMS solutions used by top-tier 3PLs incorporate more advanced technology based in the cloud, making them fully scalable and always up to date. Inventory tracking happens in real time or near to it, and orders get processed as they happen. New systems eliminate reliance on paper printouts and processes in favor of mobile phones, tablets, and wearables. These more advanced systems also come with extensive API interface capabilities, which means 3PLs can connect with customers and feed them the data they need for supply chain planning, marketing, promotions, and other revenue-generating activities. WMS data is also typically crucial for building a proper foundation for supply chain artificial intelligence.
Not every 3PL warehouse uses all these types of warehouse automation, at least not yet. The level of technology integrated into a facility usually depends on the needs of the clients it serves. However, as the supply chain as a whole continues to push forward into a digital future, it is likely that these solutions will become commonplace in nearly all 3PL warehouses before long.
About Phoenix Investors
Founded by Frank P. Crivello in 1994, Phoenix Investors and its affiliates (collectively “Phoenix”) are a leader in the acquisition, development, renovation, and repositioning of industrial facilities throughout the United States. Utilizing a disciplined investment approach and successful partnerships with institutional capital sources, corporations and public stakeholders, Phoenix has developed a proven track record of generating superior risk adjusted returns, while providing cost-efficient lease rates for its growing portfolio of national tenants. Its efforts inspire and drive the transformation and reinvigoration of the economic engines in the communities it serves. Phoenix continues to be defined by thoughtful relationships, sophisticated investment tools, cost-efficient solutions, and a reputation for success.
Mr. Frank P. Crivello began his real estate career in 1982, focusing his investments in multifamily, office, industrial, and shopping center developments across the United States. From 1994 to 2008, Mr. Crivello assisted Phoenix Investors in its execution of its then business model of acquiring net lease commercial real estate across the United States. Since 2009, Mr. Crivello has assisted Phoenix Investors in the shift of its core focus to the acquisition of industrial real estate and data center assets throughout the country.
Given his extensive experience in all aspects of commercial real estate, Mr. Crivello provides strategic and operational input to Phoenix Investors and its affiliated companies.
Mr. Crivello received a B.A., Magna Cum Laude, from Brown University and the London School of Economics, while completing a double major in Economics and Political Science; he is a member of Phi Beta Kappa. Outside of his business interests, Mr. Crivello invests his time, energy, and financial support across a wide net of charitable projects and organizations.