E-commerce is expanding to reach $1 trillion by 2025, and demand for more products and services among the world’s shippers is keeping third-party logistics providers, like Cerasis, on their toes. In the age of e-commerce, maintaining the status quo will result in failure, disgruntled customers and added expenses, but shippers that leverage 3PL resources to apply transportation management best practices for e-commerce, as listed below, can navigate the issues that arise in e-commerce and achieve sustained profitability.
Transportation Management Challenges in E-Commerce
Although e-commerce represents an excellent opportunity for shippers, it results in the creation of additional challenges in managing freight spend and moving products. Customers want their orders faster and at lower prices, and shippers that are unable to fulfill these demands, will see customers abandon their company in favor of Amazon or Walmart. The need to integrate existing systems and offer the best pricing in the industry has never been greater. As a result, shippers must understand the transportation management challenges in e-commerce. According to Michael Khalil of Inbound Logistics, primary transportation management challenges in e-commerce include:
- Increased complexity of shipping strategy. Increased complexity may be the result of additional shipping volume and the use of the freight consolidation and the consolidation program. In order to move freight faster and more effectively, shippers may need to combine small shipments into larger shipments, but failure to understand this process and use technology to help manage it will result in added expenses and unnecessary delays.
- Poor visibility into high-volume shipments. E-commerce is a type of high-volume shipment, involving countless packages moving through countless transportation lanes and multiple modes of transportation. Poor visibility into anyone shipment would have the added effect of reducing efficiency throughout the entire supply chain, not to mention angering customers. Unfortunately, the volume of e-commerce makes it difficult to track with traditional technologies, and it is not enough to track e-commerce by truck. Any freight consolidation and the consolidation program, freight could be transferred multiple times before moving on its largest possible state. Shippers require the ability to track a product from the moment it is filled in a warehouse until it arrives at a customer’s doorstep. This is regardless of whether freight consolidation was used or not.
- Lack of access to local and regional tools and resources. Shippers operating are barely entering the realm of e-commerce may struggle with tapping into a global transportation network. The nature of e-commerce implies that customers may be ordering product from around the globe, so tapping into the value of local and regional tools and resources is crucial to increased Speed of delivery and reduced delays, as well as costs.
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The Benefits of Using a 3PL in the Realm of E-Commerce
Entering the realm of e-commerce is comparable to a “Dungeons & Dragons” event. There start dangers that lie ahead, and shippers need a guide to help navigate the forest. Working with a 3PL is comparable to having an experienced guide in the game, enabling shippers to take advantage of these key benefits:
- Demand in e-commerce can change within minutes, and being able to ramp up or down productivity at a moment’s notice is essential to success in e-commerce.
- Faster shipping. Working with a 3PL can open the doors to new carriers and vendors, enabling a faster shipping process for e-commerce orders.
- Better customer service levels. Since a 3PL has experience in working with customers and business to business partners directly, they may be well-suited to offer a higher level of customer service. Furthermore, outsourcing customer service to the 3PL effectively frees time within your organization to fulfill more orders, increasing profitability.
- Lowered freight spend. A 3PL may be able to help your organization take advantage of negotiated rates and prioritized transport lanes. This has the effect of lowering overall freight spend.
- Incorporated services, like gift wrapping. 3PL’s may offer additional incorporated services, such as gift wrapping and personalization services, like engraved gifts.
- Value-added services, such as invoice auditing and small package management. Another key benefit of working with a 3PL includes the ability to use value-added services, such as in this auditing. Believe it or not, up to 10 percent of freight invoices may contain instances of double-billing or overbilling. Working with 3PL allows a company to catch the sentences and recoup the majority of the cost.
How a 3PL Helps You Apply Transportation Management Best Practices for E-Commerce
Finding the best way to apply transportation management best practices for e-commerce through 3PL closely mirrors the benefits of working with a 3PL. Shippers should expect a 3PL-shipper partnership to follow these steps to improve e-commerce logistics management.
- Benchmark existing freight spend and use of transportation modes.
- Identify weaknesses and opportunities within your supply chain.
- Create a set of rules and guidelines for managing both inbound and outbound freight.
- Gain visibility into shipment status by implementing connected tracking systems, like Blockchain and the IoT.
- Tap into the value of multiple carriers, truckers, and modes of transportation.
- Let the 3PL’s experience and reputation do the talking.
- Integrate 3PL systems, especially a TMS, into your existing platforms.
- Use reporting tools to benchmark performance and improve efficacy.
- Leverage the newest technologies to manage freight.
- Incorporate shipping quoting and management into the e-commerce checkout process.
- Keep customers informed of available inventory.
The Big Picture
The rate of expansion of e-commerce has left many shippers scrambling to stay ahead. The days of managing the warehouse, distribution center, and transportation network with simple, manual tools are over. As explained by Roberto Michel, the growth of the e-commerce technology stack for distribution centers contains many integrated levels, enabling omnichannel success. Both inbound and outbound logistics must merge, supply chain management systems must communicate, workers must collaborate, and automation must take priority. Achieving a high level of success to apply transportation management best practices for e-commerce has only one solution – shippers must look outside their existing companies to stay competitive. Shippers need to start utilizing a 3PL for its transportation management benefits and effect on successful e-commerce.