The logistics and warehousing markets are growing and changing fast. For 3PL providers, this change presents some serious opportunities. With the right business strategy, third-party logistics providers can likely secure significant competitive advantages right now.
At the same time, however, 3PL providers that adopt ineffective strategies may fall far behind their competition. As the market continues to adapt to changing consumer preferences and ongoing supply chain disruptions, these strategies will help 3PLs grow and expand their customer base.
1. Invest in Supply Chain Analytics and Business Intelligence
Data has quickly become one of the most valuable resources a business can have. For 3PLs, the most valuable data will be information on supply chain operations.
Data collected by IoT devices and monitors can be applied in a variety of ways. Some businesses, for example, are using IoT-based GPS or RFID systems to track goods as they move through the supply chain, reducing the risk that items are lost and allowing your business to provide better information to clients.
This information may include data on transit time, cost-to-serve, average order-to-delivery cycle time, and shipment location.
Combined with AI algorithms, it’s possible to further extract useful analysis from this data or even develop predictive capabilities that can help the business more effectively forecast things like delivery times or stock availability. The business can both use the information to become more efficient and pass on its predictions to customers, offering them more accurate predictions.
Other businesses are using IoT devices to monitor shipping conditions. This allows them to build a more resilient cold chain or more effectively ship items that need temperature control during shipping, like pharmaceuticals and agricultural products.
Internet-connected temperature monitors attached to important products, for example, can continuously scan and report shipping conditions. If a temperature excursion occurs, the device can immediately notify drivers, managers, and other workers who can take action to prevent spoilage.
Shipping visibility and supply chain transparency have both become extremely important to clients. As supply chain disruptions are likely to remain common well into the future, both visibility and transparency may grow even more valuable.
Technology that allows your 3PL business to provide better information will be an invaluable investment, as it will enable deeper relationships with the clients you serve.
2. Know What Your Clients Need
Businesses can have many different reasons for working with a 3PL. As the market changes, these needs and expectations may shift.
Market research will help any business determine what their client base truly needs. For 3PLs, the right analysis and information can make it much easier to offer services that bring in new customers and encourage existing clients to continue their business relationships.
3PL owners, managers, and market researchers can benefit from reading logistics content aimed towards their clients – such as articles that describe how business owners should choose a 3PL provider.
For example, some guides recommend businesses choose a 3PL based on whether or not the provider is asset-based or non-asset-based, as both business models come with unique advantages and disadvantages.
Emphasizing the type of provider you are, and the business strategy you’ve adopted, can help you persuade clients and inform them about the services you offer – potentially encouraging them to investigate your business further.
For example, a 3PL provider may include a short description of asset-based and non-asset-based 3PL providers on its site, along with an explanation of why the business has chosen one model or the other.
Persuasive content can demonstrate the expertise of your business team and inspire confidence in your services. If effective, the content can also be a powerful tool for differentiating your business from the wider 3PL market.
You can also ask clients about their needs directly. Surveys, phone interviews, testimonials, and feedback requests will all provide you with more information about what clients currently need and what needs they may have in the near future.
3. Consider a Specialized 3PL Business Model
Many 3PL providers attempt to offer the widest range of services possible to their clients. This approach isn’t always practical, however, depending on the size of your business and the resources at your disposal.
Many 3PL providers are competing with the biggest names in third-party logistics – like UPS, Amazon, and FedEx – but without the reach and resources those companies have.
While appealing to a wide range of clients is important, it’s not always possible to offer everything to every business in need of logistics services. Finding a niche can help a small 3PL provider stay competitive.
For example, one business may specialize in cold chain logistics or storage. Another may cater to businesses that need to move dangerous or highly regulated goods – like toxic materials, explosives, and scheduled pharmaceuticals. It’s also possible to focus on providing services to a particular area or geographic region.
A specific niche can also help a small business differentiate itself. It’s not difficult to find articles about the values of niche 3PL providers, like this one published in Inbound Logistics, written by executive staff from companies that position themselves as niche players in the market.
Larger businesses can have difficulty penetrating these markets or may find it is ultimately more profitable to focus on larger, less niche client bases. As a result, smaller businesses can remain competitive by offering services in these markets and working with clients who may not be able to rely on larger 3PL providers.
How 3PLs Can Navigate a Changing Market
As the needs of business clients shift, 3PL providers will need to adopt new business strategies to remain competitive. New technology, market research, and specialization can all help a 3PL provider become more efficient and compete against large, well-resourced businesses.
About the author
Emily Newton, Editor-in-Chief, Revolutionized Magazine
Emily Newton is the Editor-in-Chief of Revolutionized Magazine. She has over four years experience covering stories about warehousing, logistics and distribution.
