With every warehouse operation being somewhat unique, several conditions influence the decision-making criteria for third-party logistics (3PL) selection. Whether it is a good fit for your business requires thorough understanding of one’s operating requirements, product mix, and internal distribution & logistics capabilities.

According to Armstrong & Associates, 86 percent of Fortune 500 companies are now relying on 3PL provider. A key factor that comes into play is the shipper’s appetite for advanced automation technologies. Some new technologies within the warehouse have risen out of need and others out of necessity. As with most market changes, the hidden force driving the trends can be traced to consumer demands and economic conditions.

Key Trends:

	Speed | Less than 2-day shipping is the norm
	Variety | Interest in purchasing wider variety of products online
	Experience | Great all-around consumer experience
	Environment | Awareness of environmental impact of online shopping
	Competition | The Amazon Effect driving high competition
	Economics | Low unemployment & increasing wages

In response to these trends, several technologies have proliferated within the warehouse:

• Multiple types of dense automated storage & retrieval systems efficiently answer the speed, environment, competition, and economics trends.

• Automated packaging machines and custom sized carton building machines have transformed consumer experience as shippers have flexibility to fully tailor the marketing to the consumer and ensure top-notch presentation. These technologies have also greatly reduced corrugate waste while ensuring optimal dim-weight for the shipper which helps solve the environmental and economics variables of the equation.

The top technologies will always be those that efficiently solve the user experience, are flexible & scalable.

Considerations for determining if outsourcing is the right move:

	Operational | Do you have the time & resources to run a DC? Is it a core competency?
	Financial | What are your growth plans? How quickly can you scale?
	Regulatory | Compliance requirements vary

Many times, the requirements of the operation suggest an advanced automation technology would be a good fit. When selecting a 3PL, their willingness and competence acting as the owner and/or operator of the technology should heavily influence the decision. Some 3PL providers may not have a high comfort level acting as the operator of certain technologies.

As the hidden forces of economic conditions and consumer demands continue to challenge efficient distribution and logistics, capital investments into the four walls will grow. As stated earlier, the best technologies will be those that efficiently solve the user experience and are flexible & scalable.

Author: Linda Grady