Automotive

The evolution continues

Third party logistics providers switch to automation

November 26, 2018

For years, it seemed unfeasible for third party logistics providers to automate their logistics operations. As a result of, among other things, the ever-shorter contracts and tight margins, an investment in automation equated to suicide. At least, so it seemed. That line of thought now seems to have definitely come to an end. 3PL providers are increasingly realising that automation is the way to win the competition.

There is a clear increase in new automation requests from 3PL providers. Although in the past it was the exception rather than the rule for this sector to invest in automation, development is an evolution rather than a revolution. In theory, many logistics service providers have been working on automation issues for some time. However, the step to practice was seldom taken. This now seems to have changed for good. In recent years, Swisslog has already realised successful automation projects at, amongst others, DB Schenker, Versteijnen, Rhenus and XPO Logistics.

Two groups

In this context, we can distinguish two groups of 3PL providers. On the one hand, there are third party logistics providers who have a strong relationship with their customer. Over the years they have built up a close, long-term relationship of trust. From this relationship, more and more they are looking together – as true partners – at how logistics processes can be set up in the most effective way. Automation often appears to offer the solution. On the other hand, there are 3PL providers who enter into a niche, or have a process that is optimally suited for the deployment of, for example, an AutoStore system, or that is focused on the handling of large flows of full pallets. They too can use automation to improve efficiency and further strengthen their competitive position.

Multiple reasons

There are several reasons for the increasing interest amongst 3PL providers in warehouse automation. Since the economic crisis companies, also in logistics services, have started to look differently at their processes. Logistics operations have been scrutinized and where possible optimized. In addition, partly due to the aging population, it is becoming increasingly difficult for 3PL providers to find good and motivated personnel. Especially if they are located at a logistics hotspot, there are often simply no hands available. On the other hand, the need for new efficiency gains remains. For more and more 3PL providers it is becoming easier to complete a business case for automation and free up budget.

Flexible and modular

The automation solutions themselves also play a part in this development. Systems are often modular, so that they can be implemented 'on growth'. Moreover, the solutions are becoming increasingly flexible. Flexibility has been one of the most frequently heard counterarguments for automation in the past. An automatic system would make it less flexible for a company to respond to changing circumstances. This does not apply to the current systems and solutions at all. The AutoStore system, for example, is modularly constructed according to extremely common euro dimensions. Flexibility is absolutely no obstacle. The system enables 3PL providers to store and pick faster and more efficiently and to handle pallet and parcel deliveries from one single location. Moreover, the modular concept is easy to expand. If more transport is required, more robots can be deployed. If the picking capacity needs to be increased, additional workstations can be realised. And if more goods need to be stored, the grid can easily be expanded so that more bins can be stored. This way, high productivity, high efficiency and optimal service to the customer are guaranteed at any time. The CarryPick system is also modular, scalable and flexibly deployable. That makes the total cost of ownership very attractive for 3PL providers. And there are more cost-effective opportunities to automate (sub)processes.

Knowledge crucial

For 3PL providers who want to automate (parts of) their logistics operation, knowledge is indispensable, for example to get an idea of the costs, or to determine the possible performances. A professional automation partner is absolutely of added value. Swisslog has amply proven to be the ideal sparring partner in this area, also for 3PL providers. With the right expertise, plenty of experience and an extensive range of automation possibilities, the best suitable solution can be offered for every situation. A growing number of successful projects at 3PL providers worldwide is tangible proof of this.

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