12 March 2014
Building competitive advantage: "Contract logistics providers turn to voice technology to bridge the 'IT gap'", explains Matt Gregory, Business Development Manager for Third Party Logistics, Vocollect EMEA.
According to a recent study by Capgemini and Penn State University, 40% of 3PL customers still see an 'IT gap' between their actual expectations and their 3PL's capacity to deliver.
So how can a 3PL bridge that gap? How can you give your customer the confidence to develop a long-term relationship? What's going to stop customers taking their business back in house, or pitching you against the lowest bidder at renewal?
Hitting KPIs, SLA compliance, accuracy and cost reduction are all necessary to success, but they can be matched by the competition or customers themselves. This means that the savvy 3PL must find new and innovative ways to demonstrate its own unique value, if it is going to build those relationships and secure new business in today's volatile market.
And the pressure is on. Companies are increasingly looking for their 3PL to bring game-changing solutions to their contract. Their own market is continually evolving as the omni-channel consumer demands more flexible and convenient ways to engage with their favourite brands, and this leaves companies with a series of challenges to overcome. Whilst they know their own business, they turn to a 3PL for warehousing and logistics expertise in order to satisfy their own increasingly demanding end-customers.
To meet these requirements, 3PLs need to find new ways to provide sustainable and cost-effective solutions. But this level of innovation takes both time and money. With contract lengths remaining short and cost pressure increasing all the time, 3PLs need to ensure that any investment they make is based on a solid, risk-averse business case, where they can be sure to see their investment protected and returned within the life of the contract.
So, any new IT project needs to be relatively fast and simple to implement. As such, many 3PLs are now looking to voice to deliver the disruptive technology change their customers are demanding. Moving from paper-based or RF scanning systems to voice technology has proven to dramatically improve operational productivity by 30%, with the investment being comfortably returned within 12 months.
There are a myriad of reasons why. Voice solutions allow staff to work hands and eyes-free and are well-suited to the highly-paced piece pick environments synonymous with e-commerce, allowing 3PLs to maximise the efficiency of each pick, and ensuring ever tighter SLAs and delivery deadline can be met.
At the same time while pick-by-light or full warehouse automation works well where there is consistent demand and only minor fluctuations in picking patterns, voice-directed picking is a more flexible and scalable alternative for 3PLs with multi-channel retail contracts where a high degree of fluctuation in order profiles is the norm.
A voice solution can easily be scaled up or down, according to supply chain demand, and seasonal peaks can be addressed without having to build in spare capacity. While new systems may offer more functionality, in many cases, legacy systems and devices can be reconfigured or extended.
These benefits of voice relating to enhanced productivity and operational efficiency combined with the fact that in the case of Vocollect, at least, a voice system can operate with any WMS or ERP system over a standard RF network, provides 3PLs with the confidence and flexibility to utilise voice technology across multiple sites and customer contracts.
Ultimately, a variety of factors will determine a 3PL's ability to either meet or exceed the demands of their customers. But ultimately, innovation and the investment in technology will tip the scales for companies weighing up suppliers and seeking a 3PL who can really add value to their ever more complex supply chains. Vocollect Voice is increasingly being seen by the proactive 3PL as a way to change the game and stand out above the competition.