In my previous post, I shared the results of an informal survey I conducted with several third-party logistics (3PL) solutions providers. The survey discussed how distribution companies have evolved their service offerings to align with the shifting needs of their customer base over the past 10 years. Particularly with the dramatic shift to e-commerce and direct-to-consumer retail, many 3PLs have transitioned from managing full and mixed pallets to primarily handling cases and eaches.


As a result, the amount of labor required to fill orders has also increased, as have the costs associated with maintaining the workforce numbers necessary to meet increasingly stringent service level agreements (SLAs). Today’s warehouse worker commands a starting rate of at least $20 per hour, a 100% increase over what the same position was paid a decade ago.


To address these challenges, more 3PLs are considering semi-automated and fully automated solutions because of their abilities to enhance human productivity and eliminate non-value-added tasks. Simultaneously, however, 3PLs recognize that their typical client contract spans just three to five years. That means complex, large-scale automation investments are unlikely to deliver a fast enough return (ROI) to justify the capital outlay.


Therefore, the ideal automated solutions for 3PLs meet three criteria:


  • Scalable: Automation that can be expanded as customer needs grow and change. This also minimizes the initial, upfront investment, allowing a 3PL to better manage cash flow.
  • Flexible: Automation that can be switched on and off, accommodating unanticipated throughput shifts and expected (and unexpected) peak volumes. Further, flexibility allows one technology to be used for multiple customers as needed.
  • Quick ROI: Automation itself is experiencing technological advances that are driving lower initial price points and making the solutions themselves more affordable. When coupled with increasing wages, certain solutions can yield ROIs within 18-24 months.


3PL Automation Winners


There are several technologies that have proven themselves as ideal for meeting the needs of 3PLs for scalability, flexibility, and short-term ROI. The items below all help to maintain workforce levels and ramp up (or down) labor when required. These include:


Autonomous Mobile Robots (AMRs). These smaller, self-navigating robots travel autonomously throughout warehouses and fulfillment centers. Compact, lightweight, and outfitted with safety sensors that prevent them from colliding with their human colleagues, AMRs frequently work collaboratively with warehouse personnel in one of two ways:


  • In some applications, they travel to pickers who follow them to a stored item location from which they pick the required quantity and place it into the AMR’s tote.
  • In others, the AMRs bring totes of products to associates at workstations who remove the required item then send the robot away.


AMRs are typically outfitted with modern tablet computers that display images of the items required for a pick, making training of new associates much faster than traditional, “green-screen” warehouse technologies. Because they navigate independently, they do not require physical changes to the facility. Likewise, a fleet can be expanded as needed with more robots integrated as volume and throughput demands rise, or even moved to a new warehouse location.


Light-Directed Picking and Sortation. A semi-automated solution, light-directed picking and sortation systems utilize light modules that are affixed to a shelf or opening. The modules illuminate with a combination of lights, numbers, and arrows, allowing an operator to quickly identify a location for picking or placement of an item and the required quantity.


In picking applications, the light modules in a specific pick zone will display which items should be picked and in what quantities — either for a single order, or for multiple orders requiring the same item (batch picking). Once a pick is complete, the picker presses a button on the module to confirm that the item has been selected and extinguish the lights. This cuts down on required walk and search time for pickers as they fill multiple orders more quickly, ultimately reducing hours and headcount while boosting fulfillment productivity.


In sortation applications, light modules are typically integrated into putwalls. These systems allow multiples of batch picked products to be separated quickly into discrete orders for faster fulfillment. Putwalls are comprised of a series of horizontally and vertically divided shelves or cubbies, each with a light module in front. Each position is assigned a discrete order. Upon a scan of a picked item’s barcode, the devices illuminate in front of the cubbies representing the order that requires that item and displays the number of units to be placed there. Placement is confirmed by a push of a button on the module. Because the employee remains in one area, sorting the picks into separate orders, travel time is eliminated and multiple orders are filled faster. Further, putwalls can be mounted on casters for portability, with additional systems put into (or removed from) service to adjust to differing periods of activity.


Software. With the uptick in online order volumes over the past few months, surveyed 3PLs repeatedly noted that the capacity of the major parcel carriers, including UPS and FedEx, has been stretched to the limit as they struggle to keep up with the high demands for shipping. More than one 3PL reported that they no longer receive semi-trailers to load five days a week, but rather short, pup trucks that are picked up one to two times a week. This new constraint requires prioritization of orders to ensure orders get out the door on time.


One way to do that is by investing more into warehouse and order management system software, which can appropriately balance labor and allocate order prioritization based on destination points and shipping time requirements. This allows for more efficient handling of e-commerce orders in particular, as the software can directly route them for sortation into a specific trailer, thus ensuring 3PLs can meet their clients’ SLAs. (Picking the right WMS for an operation requires careful examination of an operation’s needs and the software’s functionality, including inventory management, the ability to coordinate system-directed picking and putting, and flow synchronization and optimization.)


Now’s The Time To Reconsider Automation


Perhaps your organization considered investing in one or more of these technologies a few years ago, but it didn’t make financial sense. I suggest that now would be a good time to revisit that assessment. More and more states are raising the minimum wage, which warehouses were already doing simply to attract and retain labor.


An investment in automation allows technology to handle the dull and routine tasks — such as travel between picks — so your employees to be dedicated to more value-added, higher-margin work. Further, automation does not take breaks or call in sick. This increases efficiency and throughput while enhancing overall accuracy. With the inherent volatility of today’s pandemic-impacted times, your ROI in automation is far more likely to pencil out far faster today than it did even 12 months ago.


Is your 3PL, warehousing or distribution operation interested in learning more about how DCS can create an automated handling solution that’s scalable, flexible and delivers fast ROI? Connect with us.


Scott Singer, Systems Sales Consultant,

A 10 year veteran of the 3PL and material handling world, Scott’s career has been focused on solutions engineering and design, business development, and sales consulting. Scott spent most of his career developing cost saving innovative designs for 3PLs and their clients. He leverages this experience to help 3PLs generate flexible high return solutions. In his free time, Scott spends his time exploring the four corners of the world in culture and the great outdoors.