Why 3PL Companies must align with client’s ERP data for smoother operations in 2020?

3PL companies: Collaborating with Technology

Third-Party Logistics provider (3PL or TPP) companies are independent experts who manage end-to-end logistics for companies who do not have their own warehouse and distribution facilities.
With trend of outsourcing thriving in recent years, more and more companies are opting for 3PL services to add value to their supply chain without investing in necessary infrastructure. To address the growing demand 3PL firms have found value in aligning their systems with clients' ERP to achieve efficiency in managing their supply chains and deliverability.

"Many 3PLs are responding with increased capabilities and greater technological expectations, something essential to the 3PL's survival. Consumer behaviors have changed rapidly over the last several years, increasing the overall collective service levels within the industry. It is impossible to meet those demands without the proper technology on the front-end to execute. And those that are not investing just won't be around."- Joe Carlier, Senior Vice-President of Sales at Penske Logistics
Gone are the days, when 3PL companies used to work remotely focusing only on shipping or warehousing giving no or less importance to data. There has been a paradigm shift as third-party logistics companies are embracing a wide range of services and technology enablers to meet customer expectations.

According to 2019, 23rd Third-party Logistics Study, customers are concerned about the technological capabilities of their 3PL partners. Emerging technologies like Blockchain, Automation, and Data-driven analytics are key trends in this sector.

Why is alignment with clients' ERP a must?

ERP is driven by data to integrate inter-firm activities and achieve full-fledged coordination with entities making supply chains more responsive. In the absence of an exchange of real-time information between the 3PL provider and the client’s ERP data, chances of errors and delays are higher, leading to gaps in performance. The capacity of a robust warehouse and transportation system with 3PL companies remains underutilized if they do not fully integrate with the company's ERP.
Let's see the reasons why it is essential to align the two data systems

• Handling data with maturity: In order to make supply chains more effective, 3PL companies are expected to act on real-time data captured from various sources along the supply chain to offer advantages of lower costs to their clients. Disconnected applications that leave data gaps may put client at a competitive disadvantage. They may not be able to cope with demand fluctuations in the absence of contextual data. On the other hand, a logistic provider also not be able to optimize the routes, thus failing to deliver right product to right customer at right time as committed by the client. Automation ensures that data flows seamlessly to-and-fro between logistics and client ERP to avoid confusions, handle variable demands, and empower decision-making in a volatile environment.
• Making supply chains dynamic: A proper alignment ensures agility in logistics. Monitoring and controlling becomes easier as third-party logistics provider work faster and smarter to maintain optimal inventory levels and respond to variable demand patterns across the client’s demand. The 23rd annual TPL study further reveals that technology is touching every aspect of supply chain, and by implementing right tech drivers, 3PL providers can deliver optimal solutions for their clients.
• Analyzing consumer trends: 3PL companies manage flow of goods and thus generate a massive volume of data. Client companies can harness and utilize this data to understand the preferences of consumers and predict future trends. Companies can act proactively by adjusting their productions schedules, thus achieving operational efficiency internally, while producing on-demand to meet the needs of customers.

Example of 3PL provider performing better with ERP alignment

National Tiles, a market leader in imported tiles and stone flooring in Australia, avails the services of C.H. Robinson to handle their international freight business. C.H. Robinson is an American Fortune 500 provider of multimodal transportation services and third-party logistics company.

C.H. Robinson uses National Tiles ERP for effective planning and procurement. They find that the client's ERP can be leveraged to create one source of truth, automate certain functions and obtain visibility to products while aligning with C.H. Robinson’s network and cross-docking to support commercial orders. Further, with right information, inventory management, product delivery, and positioning can be improved manifolds.

C.H. Robinson’s tailored technology solutions based on ERP used by National Tiles required setting up Advanced Shipping Notices (ASNs) delivered via EDI and integrating detailed shipment information from C.H. Robinson's technology platform into ERP. As a result of this, National Tiles remains updated on the status of their shipments without requiring manual keying-in of shipment files and orders with the help of ASN.

National Tiles has reported a 92% increase in shipment creation efficiency and also forecasting accuracy has improved. The seamless system integration between client and 3PL company ensures full visibility from order placement to shipment and arrival of freight.

How integration of ERP data is a win-win solution

Third-party logistics companies are recognizing the importance of bridging the technology gaps; not only internally within their systems but also externally between their clients and their delivery partners. The tech partnership between 3PL companies and their clients will continue to evolve as both parties take advantage of higher data availability and enhanced ability to make decisions in real time. Further, 3PL firms can pass the cost benefits accrued by implementation of technology to their clients in terms of lower service charges. The tighter integration and collaboration through tech alignment leads to sustainable and long-term relationships between parties. Both 3PL companies as well as clients become more responsive, accurate, and deliver superior customer service when ERP of client companies is synchronized with 3PL's technological capabilities.

Conclusion

Creating a bridge between client’s ERP and 3PL companies is necessary for enhanced customer experience for client and 3PL provider, the customer being the client for 3PL provider and the end-user for client.

No more need to function in data silos; collaborate with Katalyst Technologies to achieve seamless integration across your business supply chain.

Also, stay tuned to know the latest technologies that 3PL providers need to have in 2020 to ace their competition. Get in touch now!