Digital transformation integrates technology into all business areas, thereby creating new changes in how the organization operates and bringing new values to customers.
Logistics is considered a traditional industry with manual work and has not achieved optimal efficiency. When the demand increases, businesses can look to logistics digital transformation solutions to optimize their operations to save time and cost and improve customer experience.
As partners of businesses in many different fields, 3PL companies face many difficulties in providing and maintaining customer service quality at its best. The following article consists of 3 parts: (1) difficulties of 3PL companies, (2) solutions to the logistics digital transformation for 3PL companies, and (3) practical examples that have successfully implemented the solution.
1. Difficulties of 3PL companies
Route planning is done manually, depending mainly on the experience of the driver and coordinator.
Usually, it takes a dispatcher 1 to 3 hours per day to complete route planning and order allocation for vehicles by experience. Manual route planning, which relies heavily on experience, leads to a lack of tools to track delivery routes and measure orders in the plan. When the quantity and volume of goods are increasing, 3PL companies have difficulty optimizing the route, leading to high transportation costs and prolonged transit time that affects the delivery schedule and the quality of customer service.
During the delivery process, drivers often follow their manually planned route without precise calculations. When the number of delivery points increases, errors may occur, such as unoptimized delivery routes leading to late delivery, inferior quality goods before reaching consumers, etc.
Managers do not have end-to-end visibility over the entire delivery process and have difficulty in measuring delivery efficiency.
The tracking and management of orders in 3PL companies have not performed effectively. Currently, they are using many communication channels such as email, phone, text messages, etc., causing fragmented communication and unclear information between managers, drivers, and customers. The manager has to call the driver every hour or wait until the end of the day to check the order status. They lack tools to track deliveries and control order status in real-time, resulting in ineffective management.
The compilation of data into reports is inefficient and not visualized.
Most 3PLs' current data is managed by humans and stored in multiple sources. Every month, businesses spend hours summarizing delivery results and make reports. The data is not aggregated in charts and tables, making it difficult for managers to analyze the transportation efficiency of each shipment and offer solutions to improve the next time.
2. Logistics digital transformation solution for 3PL companies
To solve these difficulties, 3PL companies should look to logistics optimization solutions. Abivin vRoute - the Logistics Optimization Platform - will help 3PL companies create efficient transportation plans in minutes to minimize logistics costs and maximize fleet productivity.
Automatically optimize transportation plans
Abivin vRoute’s unique optimization algorithm automatically assigns orders to maximize vehicle weight and volume, satisfying more than 30 constraints, including customer's required delivery time, driver's working time, multi-temperature, forbidden road, etc. Given the same quantity of goods, the vehicle fill rate increases, and the number of delivery vehicles reduces, thereby saving delivery costs for the company.
Moreover, 3PL companies can also divide orders according to temperature (Normal, Cool, and Frozen) and use the 3D loading feature to arrange and edit as desired.
Manage the delivery progress in real-time
While deliveryman is delivering with the support of Mobile App, 3PL companies can monitor the whole process in real-time map. Many Electronic Proofs of Delivery, such as photo check-in, electronic signature, etc., help businesses track delivery status and improve transparency.
Export logistics reports quickly and efficiently
Abivin vRoute supports various reports, helping businesses summarize delivery results in just a few minutes. With powerful analytics, 3PLs can make more accurate and efficient decisions to improve customer experience.
3. Case study
A leading 3rd party logistics provider in Southeast Asia, specializing in cold chain management, transportation, warehousing, and distribution for clients across sectors such as FMCG, agriculture, and pharmaceuticals, has successfully applied the logistics digital transformation solution to optimize its operations.
This 3PL company has applied the Abivin vRoute solution for their two models: the Distribution Center model and the Pickup and Delivery model. The company has used Abivin vRoute for two years, with more than 50 users in the system.
Distribution Center Model
In the Distribution Center model, goods are transported from the manufacturer to the distribution centers and then delivered to the customer. It poses a problem of optimizing the delivery route (Vehicle Routing Problem) that the company needs to resolve.
Previously, 3PL's vehicle fill rate was only 50-60%. Thanks to Abivin vRoute's powerful algorithm, which can satisfy more than 30 constraints, the company could optimize the rate up to 85-95%. The company uses fewer delivery vans but transports more goods (sorted according to the right temperature). As a result, the company can save transportation costs and increase delivery efficiency.
Abivin vRoute solution helps 3PL companies track and manage orders in real-time, increasing transparent and seamless communication efficiency. Precisely, when using the software, businesses can track delivery progress, delivery status, truck location, and costs using real-time maps as well as multiple Proof of Delivery methods such as Photo check-in or Electronic signature. The company does not have to call the driver every hour or wait until the end of the day to check the order status as before.
Pickup and Delivery Model
The Pickup and Delivery model is a model in which delivery trucks start from the warehouse, move to the pickup point, and then transport to the drop-off point.
The order that this 3PL company often uses is Full Truck Load (FTL) and Less Than Truck Load (LTL). With Abivin vRoute, 3PL companies easily create and optimize pickup and delivery routes for FTL or LTL orders. The system also automatically assigns the most suitable vehicles for the company's transportation plan and calculates the driver's rest time during long-hauls, saving drivers and dispatchers considerable planning time.
After applying the logistics digital transformation solution from Abivin, the 3PL company was able to:
Increase more than 20% in vehicle fill rate;
Save more than 850 hours of planning, managing, reporting per year;
Reduce 10-30% of costs and time for logistics activities.