Everything interesting, new and useful about the logistics and 3PL Industry

Archive for March, 2014

The Rise of RFID technology

RFID Technology

With the advent of big-box online retailers like Amazon.com and Costco.com, we have started to see a revolution in warehouse technology. As you would expect, these companies are not just buying up large buildings and putting their inventory inside, they are innovating and changing the way we view warehousing as an industry. One cutting-edge innovation being tested is the use of drones for delivery. Already, in parts of the world, drones can bring you anything from toothpaste to a new cover for your cell phone. It can literally be en route to you minutes after you place your order (see Amazon Prime Air), But drones aren’t the only cutting-edge technology helping to revolutionize inventory management and bring a new efficiency to warehousing.  Another such innovation is the broad use of RFID technology.


RFID stands for radio-frequency identification. It is a wireless method of storing and quickly transmitting information about a product. This gives a manufacturer or retailer the ability to identify and track products on a much larger scale than previously possible with older methods that rely on the recognition and interpretation of (typically) print information in order to find and track a package. In short, products can now move from manufacturer to retailer more quickly than ever. As a result, costs come down for consumers while the ROI for retailers and manufacturers increases.

 How Does RFID Work?

In the past, a typical warehouse required very little in terms of sophisticated technology just good computers, spreadsheets, and terminals to facilitate warehouse workers’ ability to track and find any inventory that the warehouse held. The investment in technology may have been low, but a warehouse required a large human contingent and would suffer the slowdowns and labor costs that come with that. Now, imagine a warehouse that does not require a human “picker.”  RFID technology lets a warehouse log in packages automatically and then stores that product description and the exact location. Orders arrive for a product and there is no need to hunt for it. Any product tagged with RFID technology could automatically be found when the order is made, and the transition from warehousing to shipping becomes as automated and as seamless as the ordering itself.

 Why Does This Matter?

RFID is part of the change in retail that is creating broader access to a larger range of goods and services, as well as another avenue for retailers to compete on price, helping us all spend less. Both of these are good news for those interested in saving money and in having a broader array of consumer options, and typically, that is a majority of us. Even better news is RFID technology benefits all of us in more than just consumer or retails applications.

 Non-consumer Applications

Somewhere, there is a farmer who will never lose another sheep because he can track his flock with implanted RFID chips. There’s also a car manufacturer that is able to lower its cost of production by doing efficiency studies premised on the location of any given piece of the car on the assembly lines at any given point in the manufacturing process. Imagine as well, an oil company knowing exactly where to look for dock workers reported missing from the oil platform in the middle of the Atlantic Ocean. RFID brings innumerable benefits to the various logistical needs of so many businesses and platforms. Being able to keep track of the individual components of a host of things (warehouse items, cellphone covers, car parts, dock workers) allows industries to streamline operations in ways that have previously been impossible.

RFID technology has lowered the cost of locating, identifying and tracking, and we are only starting to explore the many applications. It will be exciting to see what comes next.

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4PL Services: What is it?

In business, there are four basic dynamics: 1PL (first-party logistics), 2PL, 3PL and 4PL. Each progressive number indicates the distance away from the actual product: 2PL, for example, indicates a transport or cargo company, while 3PL indicates a purely logistical company. In terms of 3PL companies, these can be either asset-based or non-asset based, depending on the types of businesses they work with. Asset-based companies are more hands-on than non-asset-based companies because they own or pay for storage facilities, transportation and even warehouse staff. Purely hands-off 3PL companies simply consult with their clients as to how best to handle business needs and logistics.

4PL Companies and Supply-Chain Management

3PL companies offer logistics consulting to their clients, while 4PL companies provide both these services as well as services specific to supply-chain management. A good 4PL company cannot only function as a 3PL by means of purchasing, storage and shipping, but it can also provide clients with financial services, customer services and supportive computer software. For 3PL non-asset companies, this means that extending the business model to include supply-chain warehouse management services is relatively simple. 3PL companies that already work in warehouse management are privy to information relevant to the supply chain and therefore will have an easy time incorporating supply-chain management into their services.

Offering this type of management does not require a 3PL company to become asset-based; it simply means offering a new, specific set of logistics management solutions. In terms of warehouse management, 4PL services could include providing clients with products such as voice-picking software as well as central-administrative software by which to organize delivery companies, call centers and other contractors.

Switching from 3PL to 4PL

Many 3PL companies are taking steps to expand their business by incorporating 4PL capabilities into their business models. Since the logistics-management industry is relatively new, it may well be that this trend is part of the natural evolution of the industry itself. Remaining a non-asset-based company while expanding to offer 4PL services is not impossible, but it does mean there will be restrictions on the capabilities of the business. A company may offer its clients software and consulting services that address everything from purchasing and shipping to customer care and financing, although it will not benefit from providing any of the physical services itself.

To transform from a non-asset 3PL company into an asset-based 4PL company, however, means endless opportunities for more clients and further growth in the future — not to mention a larger bottom line. Purely logistical transportation management systems, for example, are useful but only in terms of a consulting service. An asset-based 4PL company, on the other hand, is a one-stop solution for warehouse management. Not only can a client receive logistical support, but they need not worry about choosing their own associate transport and shipping companies.

Basic 4PL Services

The end goal of a 4PL company is often to help other companies save money where on their own they wouldn’t be able to break even. A wholesale distributor, for example, may be required to provide accessories or spare parts to the consumer, whether or not those parts are profitable. A side-business in buying and shipping these spare parts may take away much of the business’s core profit, however it is necessary to keep doing business. 4PL services should make it possible for clients to stop losing money on necessary but costly projects such as these.

If logistics companies want to be as valuable as possible to clients, extension into 4PL management is ideal.

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Encouraging Safety Practices in the Warehouse Environment

Supply chain managers looking to implement warehouses locally or globally need to carefully consider the conditions of the working environment. Conditions which promote safety will aid in achieving the highest productivity and efficiency of processes possible. A critical factor at play is promoting a healthy work environment with plenty of room for employees to work to their fullest potential as well as increasing employee satisfaction.

Setting a Standard for Safety

Planning for future growth, which could require more employees to work within a facility or implementing additional facilities, should be considered. However, a set safety standard that encourages employees to take safety into their own hands through rewards can keep the number of additional employees needed to a minimum. This is because safe and satisfied employees are more productive, more efficient and ultimately more likely to stay with the company. Employees who stay with the company relieve supply chain managers of the responsibility of training new employees. With skill and practice comes efficiency.

Employee Satisfaction and Comfort

For the greatest efficiency and highest productivity, according to the National Institute of Building Sciences, it’s crucial that warehouses be designed for comfort to increase employee satisfaction. Employees who have enough space to work in will feel less crowded, which increases productivity. Planning ahead is important to ensure that company growth and increase in product demand does not result in the number of employees exceeding the space available to them. Employees who are more comfortable in general, satisfied with their working conditions, and who have plenty of space to move about in are more likely to smoothly handle an increase in product production if need be.

Planning for Future Growth

The University of Pretoria’s report, Faculty Design: Achieving Overall Efficiency in the Warehouse Environment, explains that designing facilities requires a strategic plan focusing on global implications for potential growth. With a set standard throughout all company facilities, current and future, basic warehouse functions (pg 8) can be considered and a facility’s life cycle can be efficiently implemented for optimum safety.

Case Study: Apple

University of Pretoria’s report cites Apple as a case study when discussing the most efficient layout of a warehouse, which can be viewed in full on page 11. It is important to note that collecting data concerning the needs and status of the warehouse environment is the first step Apple takes. It then designs and plans for the productive processes and flow of materials through the warehouse. It ultimately ends with implementing the layout, though there are several standardized steps to be carefully considered in between the data collection and implementation phases.

Case Study: Office Depot

Office Depot puts the personal responsibility for workplace safety into the hands of its employees, by motivating them and improving their morale. It implemented a single automated safety program for all sites, so that standards were the same throughout the company. Employees who completed their work safely were rewarded, leaving them happier through autonomy and personal responsibility. This also saved supervisors time and the company money.

What should supply chain managers consider when implementing a set standard to optimize productivity and efficiency?

· Employee safety, which relies on personal responsibility, depends much on the health of the employee.

· Employee health can be cultivated through addressing psychological needs of employees, not just through hand washing or providing sick days.

· Employees will be more productive if they are paid a proper wage. When paid below a living wage, they will become burnt out and work will become sloppy, resulting in errors that can cost not just company dollars but also lives.

· Employees who are satisfied and rewarded for their safety efforts will stay with the company longer, avoiding the learning curve of training new employees. This increases efficiency throughout warehouses.





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5 benefits of using a Transportation Management System

5 benefits of using a Transportation Management System

5 benefits of using a Transportation Management System (TMS)

Regardless of industry, a smart business owner or operations manager is always looking for ways to increase efficiency and reduce overhead. In today’s ultra-competitive economic climate, finding ways to increase margins without negatively affecting quality are invaluable. Fortunately, developments in transportation management software have made it possible to increase margins while simultaneously improving efficiency and quality of service.

A transportation management system is one of the best services any company involved in logistics can invest in. However, not all transportation management and warehouse management services are equal. Before choosing which system to use, it is important to understand the benefits of such a system, and to compare cost with the ability to deliver tangible results. While some companies choose to take care of their logistics software needs in-house, there are significant benefits to outsourcing this requirement to a third-party logistics software company. Third-party logistics, or 3PL software gives your company access to experts who specialize in making your logistics process more efficient so you can focus on your core business.

Here are five key benefits of transportation management systems that you should consider when making a decision.

Reduce freight expenses

A good transportation management system will include analytics and suggestions to reduce expenses such as driver overtime, fuel, and inefficient routes. Utilizing data such as where your drivers and equipment are currently located makes it easier to get freight where it needs to go as quickly and efficiently as possible.

Track drivers in real-time

There are numerous benefits to being able to see where your drivers are in real-time. One of the biggest benefits is the ability to gather data about how much time specific routes take in order to build a more efficient schedule. You can also gather data on which drivers are most efficient, and which ones could improve on their time through more efficient routes or better driving habits.

Warehouse inventory management

Even the best-run warehouse can sometimes be a chaotic place. Between suppliers and drivers constantly arriving and departing, inventory always on the move, inbound inventory that must be received before outbound orders can be shipped, and urgent orders that need to be fulfilled coming in at any time, a well-run warehouse is an integral part of the logistics process. Any effective transportation management system will include (or be easily interfaced to)  a robust warehouse management component as well. Warehouse inventory management software will allow vendors, suppliers, and anyone else to set up an appointment. It will also create a consolidated database of incoming and outgoing orders (and assign employees accordingly), and can track where specific inventory is located both in the warehouse, in transit, and once it arrives at a customer or another warehouse. Not only will this data increase real-time efficiency, it will also make it possible to review costs and processes in order to make them more efficient in the future.

Streamlined billing process

One of the benefits of electronically tracking your entire transportation management system is that you will be able to more efficiently handle accounts payable and accounts receivable. A good transportation management system will allow you to automate most if not all processes. The amount of time you’ll save on paperwork alone makes transportation management software worth the investment!

Increase supply chain efficiency

Everything from tracking drivers and inventory to automating accounts payable and receivable processes all work together to increase the efficiency of the logistics side of your business. Depending on the size of your business, the savings can have a significant impact on your bottom line while improving your ability to fulfill customer requests.

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