Top Technology Requirements to Create a Successful 3PL Business

Logistics Industry is progressing in terms of operational excellence and pace, thereby expanding prospects of industrial revolution.

Companies in order to focus exclusively on their core operations find it economical to outsource their distribution and logistics function to third party vendors instead of managing them in-house, thereby enabling concurrent development of 3PL service providers. The service industry being an excessively competitive one, the level of service provided by the 3PL providers need to be excellent. As a result more and more 3PL service providers take on information technology as a tool to acquire better market share and gain increased comparative advantage.

Technology Needs

Most of the times lack of real time visibility & access to information results in misinterpretation. Technology has the answer for all these problems. Present day technologically advanced 3PLs employ various software applications to resolve such business complications and set a perfect platform for greater supply chain visibility and hassle-free information exchange. These technology applications used by 3PLs can be broadly classified into three major categories:

  • Supply Chain Optimizers
  • Performance Enhancers
  • Seamless Communicators

Figure: Technology Needs of a 3PL

1. Transport Management System – A well designed Transport management system (TMS) provides optimum technological solution for logistics operations. Companies intend to gain maximum returns on investment and hence employ TMS to overcome complexities of logistics function. Be it planning the mode of shipment or unloading the trucks, a TMS takes care of end to end transportation activities.


  • Vehicle tracking
  • Route optimization
  • Carrier planning and management
  • Real time Information
  • Transportation mode planning

2. Warehouse Management System –

An efficient Warehouse Management System (WMS) aims at controlling warehouse activities such as movement of goods, dispatch, pick and put-away, storage and assurance of quality. The system encompasses use of Auto ID Capture techniques, Barcode, RFID, and Mobile devices which help in managing warehouse activities in orderly fashion. Companies take up such mechanism to stay ahead of the competition and expand their line of operations in order to develop potential business competences.


  • Improved visibility
  • Safe handling
  • Increased customer service
  • Enhanced operational efficiency
  • Reduced errors

Performance Enhancers

1. Visibility Solutions – Visibility solutions provide access to real time status of product across entire supply chain in terms of place, location and time. Organizations achieve such an objective by employing software systems that will equip them with real-time information of the entire supply chain as and when required. It has become a strategic move for third party logistics service providers to integrate custom developed visibility solutions to gain more visibility in their inventory, orders, shipment on transit and achieving real time status of orders dispatched.


  • On-time demand fulfillment
  • Access to critical information
  • Improved inventory management
  • High control and execution
  • Increased supply chain responsiveness


2. Business Intelligence – Business Intelligence aims at supporting effective and informed decision making through sets of data analytic techniques. These tool based techniques allow organizations to identify, extract and analyze the business relevant data and transform them into useful information thereby enabling the 3PL service providers achieve end to end visibility of the entire supply chain network. Also it is critical for a business to establish a well monitored supply chain network to immediately deal with potential or sudden problems. Business Intelligence solutions help to provide exactly the same watch on the supply chain through automated mechanism of alerts and notifications, which eventually help the managers to identify and remove discrepancies in the network without affecting the productivity or customer service.


  • Extensive reporting
  • Periodic alerts
  • In-depth data analysis
  • Advanced notifications
  • Online analytics

3. Green Supply Chain – Increasingly hazardous environmental impacts of industrial practices have raised the level of concern among the businesses and consumers alike. Leading 3PL organizations have started focusing on embracing green practices and have realized the benefits of adopting eco-friendly approaches for their operations. IT enabled management systems have played an effective role in creating a green supply chain, and at the same time contributed in reducing the operational cost, & in increasing the customer base for these industry leaders.


  • Minimized usage of paper
  • Reduction in carbon footprint
  • Environmental sustainability
  • Easy integration with other management systems
  • Lower human intervention

4. Social Supply Chain – The newest trend to have influenced supply chain management is Social Supply Chain. The use of ‘Social media technology’ to stay connected with business units for availing professional benefits are in the rise. 3PL Companies have started making productive use of social media websites for developing their business prospects and improve customer services. The biggest advantage of getting socially connected is that companies can have opportunities to directly interact with their customers and improve their line of operations with feedback mechanism.


  • Increase in customer service level
  • Enhanced business opportunities
  • Improved operational efficiency
  • Improved customer relationship

Seamless Communicators

1. Electronic Data Interchange (EDI)- EDI enabled communication allows businesses to exchange business oriented information, data and files electronically. The system utilizes set of mapping tools which converts information into standard format. Logistics companies are making use of this technology to facilitate seamless flow of information across the business partners and enable timely, accurate and purposeful communication.


  • Quicker response time
  • Increased collaboration with partners
  • Less manual efforts
  • Environmental friendly approach

2. Enterprise Mobility – A streamlined and leaner supply chain is the requirement of the day to overcome some of today’s most challenging issues like slender margins and greater competitions, reduced product lifecycle, and increased customer expectations. Mobility in supply chain plays key role of bridging the gap in functional disparities and help to create a lean supply chain. Mobile solutions and smart applications have revolutionized the ongoing trends in supply chain by offering advanced hand held devices which makes business relevant information available as and when required. Mobility reduces the hidden wasted/lost time in a business process.


  • Instant availability of information
  • Increase in supply chain efficiency
  • Enhanced productivity
  • Reduction in cost
  • Improved productivity and supply chain performance

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