Innovation of sustainable logistics in 3PL Industry
The 3PL industry plays a central role to an economy since it contributes to its growth and creation of international competitiveness. With an ever rising growth in this industry especially in the freight transport, the challenge has always been to increase the efficiency and hence, competitiveness of the logistics sector and in the reduction of the impacts of the sector on the environment. Innovation is a major concern in this industry and the Third Party Logistics firms are always looking into ways of innovating so as to achieve a revolutionary in competitive advantage. Sustainability in midst of such innovation aims at finding solutions that can achieve efficiency and ecologically sound operations in the industry. Sustainability attracts a lot of managerial focus in 3PL industry due to pressure from various stakeholders such as investors, policy, makers and customers especially in the transportation sector. Logistics innovation refers to the services related to logistics from the simple to the complex ones, which is considered to be new and of assistance to a specific audience. This audience can be external where customer service is made better or internal where operational efficiency is improved by innovation. The 3PL industry needs various support activities for the logistics activities in the procurement, warehousing, transportation, order processing, customs brokerage and customer service departments require innovation for sustainability. Environmental sustainability is very crucial in the economy and since logistics sits among the causal factors in the pollution of the environment, innovative initiatives must be in place to reduce its impact. This paper aims at looking into innovation that ensures sustainability in the 3PL industry and the discussion includes the use of technical innovation (information and communication technologies), administrative innovations and Integrated Green Innovation in Logistics for sustainability of logistics services.
Innovations can be classified into two categories which include the technological or technical innovations and administrative or non-technological innovations. Technical innovations mean the technologies that are needed for data acquisition, transportation and warehousing and information management. Administrative innovations refers to various changes in the business process and structure , supplier and customer relationships management and issues related to knowledge management that bring about innovation .
Information and communication technologies
The information and communication technologies (ICT) are very essential in exchange and seamless flow of information in this highly competitive industry. The use of ICT in transportation of freight makes it possible for transport users in the identification of services that mostly fit their purposes and for 3PL firms manage deliveries and freight shipments strategically. The increase in the freight volumes and a growth in societal demand for sustainability have presented the logistics industry to improve the efficiency of their operations. The firms in the 3PL industry have to look into the available opportunities for efficiency improvement in the warehouses management, freight transport modes and in the distribution channels for products to reach the destined markets. Innovation in these sectors make the traditional measures aimed at responding to growth in congestion like transport network transportation to be feasible to a degree and other approaches whose aim is to increase efficiency in this sector. With ICT management in transportation sector of this industry ensures that existing vehicles and infrastructure can be put into efficient use. The use of advanced IC makes the management of the various facilities in the warehouse efficient and this result to decongestion and ease movement and storage of products before being delivered to their destined markets. There are an increase number of ICT applications being developed to be used in the various transportation modes and in the interconnection of all the modes in processes of logistics management. For the 3PL industry to embrace the advantage and efficiency afforded by the use of ICT in the logistic center, they must have innovative solutions for information exchange and information management. In order to do this, they need to overcome some hurdles that include information standardization, requirements for legal compliance and security and their capability in using the various ICT systems.
The exchange of information is very essential for dynamic, collaborative and flexible logistics with an aim of establishing paperless documentation which is made possible by electronic information flow which is connected to flow of various products. In the distribution channels, sustainability is achieved through speed in processing of information for the ordering, warehousing and distribution at minimum interferences of the entire process. Sustainability is also achieved through efficiency afforded by the ability to trace and track freight across the numerous transport modes and in the automation of the freight data exchange. This can be assisted by the development of a framework specifically meant for exchange of information between various actors in the entire logistic chains. Such a framework includes some set standards, governance, administrative and legal matters that make any innovation introduced by the management in the logistic process to work smoothly without any hitches. Another important aspect that is being introduced is the various developments whose aim is the facilitation of intelligent cargo, making the players or companies to be aware of the location and context of various goods expected in the distribution networks. These developments improves efficiency by having the players in this industry to be connected to a broad variety of logistic services and this can lead to improvement in productivity of logistics of the freights. These developments relates to e-Freight concept whose support in ensuring sustainability cannot be underestimated since they have impacts of speed , safety and cost in the logistics operations in the industry. An essential factor in these developments is the aim to make easy the chain of freight logistics and information exchange. For the 3PL companies operating in the industry, they are able to ensure sustainability through an increase in efficiency, reduction in cost and creation and exploitation of new opportunities in the market with help of a new competitive advantage. The various developments in this sector include applications for booking services, a documentation process that is electronic based, management of real-time traffic, tracking and tracing of cargo and giving reports to the competent authorities of challenges that 3PL firms encounter in the process of carrying out their operations. In addition, an e-Freight and involved policies can go beyond the boundaries of information exchange in every mode of transport to include applications such as ITS for road transportation, Telamatics Application for Freight used in rail transportation and Blue Belt used in maritime mostly in the European Union. This shows the extent to which the innovation can have far reaching impacts in the industry by the enhancement of the entre process and reduction of costs.
The application of ICT innovation is very essential for the 3PL industry when logistics applications are involved in the urban logistics. Delivery operations and efficient logistics are of great importance in the urban areas for the purpose of supplying a broad variety of goods to commercial enterprises and residents. There is extensive logistics which shows that volumes in urban freights have been on the rise faster than overall economic activity and this trend has increased congestion and impacted on the environment. Hence, information technology developments and application impacts the services provided by third party logistics firms right from the source of various goods in the manufacturing places, the freight routes such as ocean carriers, airfreight and road transport to the warehouses in the urban settings. The use of information technology is needed in sharing and coordination of logistic information in the process of decongesting of supply chain and timely delivery of goods to various commercial places in urban centers. Such coordination ensures sustainability is achieved at all the supply chain stages products, and this is important for companies that outsource services provided by third party logistic industry. However, very vital technical innovations are needed in terms of hybrid freight facilities and vehicles and electric deliveries which can improve efficiency and profitability for firms and reduction in congestion, noise and carbon dioxide emissions which will lead to socially responsible players in the industry through clean air. For the companies operating in third party logistics industry, new vehicles in the supply chain and facilities in the warehouse will open up potential for delivery options and logistics like deliveries during the night. Apart from ensuring sustainable service deliveries to the customers, there will be less congestion in the cities due to the enhanced flow. For instance, there are various evaluations which have been carried out funded by the European Union in some countries on logistics and technical feasibility of large-scale adoption of hybrid and electric vehicles in major cities. This evaluation has involved investigating the uptake of significant success factors in the market for the purpose of sustainable innovations such as technologies in the urban logistics. Moreover, the door-to-door deliveries efficiency has been improved through the development of ICT tools across cities by use of the information systems for supply and demand side. The information systems make it possible for operators to carry out monitoring of operational status of various facilities such as vehicles, plan the best delivery routes and delivery schedules. These types of improved scheduling and vehicle routing systems indicates the kind of innovation which can be used in the industry to offer efficiency and sustainability. Evidence has shown how these systems can be used in achieving savings in times spend on routes and in the estimation of accurate delivery times to the intended customers.
A major reason why companies in the industry fail is their lack of anticipating need for introducing and adopting change in the provision of their services. This failure diminishes sustainability of these services but with innovation, they can have an essential competence which is required for many firms. Empirical studies have indicated that companies in the industry which adopt innovative management systems are able to remain competitive and hence profitabile than those firms which failure to embrace such changes. These systems ensure that companies are competitive and maintain competitive advantage especially due to a market that is becoming increasingly hyper-competitive and complex. In this industry, failure by a firm to embrace information technology will lead to its loss to competitors who have are able to achieve sustainability even in turbulent moments. The providers of logistic services have to be innovative sp as to meet the many problems while sustaining profitability and growth. In fact, ability to innovate and embrace innovation has an overall effect on quality of services provided which plays an important role in ensuring sustainability. When technological innovations are combined with administrative innovations, the result is an improved level of operation for third party logistics firms which will be translated into more profits, growth and sustainability.
Administrative innovations
In the Third Party Logistics industry, outsourcing of services has to be management in a manner that efficiency and sustainability is achieved and for that matter, administrative innovations play an important role. The most significant innovation in the industry has been Just-in-Time but other types of administrative innovations have been influencing the industry. It has been argued that administrative innovations where processes and people are involved result to bigger sustainability in competitive edge for firms developing and adopting them since they are less likely to be copied than technologies that are normally offered by suppliers. JIT has influenced this logistic industry since it has enabled the services outsourced to be provided more effectively through more frequent and smaller deliveries. In addition, JIT by the use of signaling systems like Kanban has made it possible to pull commodities from supply chain instead of the conventional push system whose basis is demand projection. JIT is an example of administrative innovation which can continue to have positive effects in the 3PL industry currently.
There are also value added services like co-manufacturing, co-packing, mass-customization , postponement , labeling and warehousing whose expansion is becoming of great importance to the logistic providers across the supply chain . These services are helpful in avoiding commoditization in the entire industry. Moreover, players in 3PL industry own various intellectual capital and computer systems which allow them to provide end-to-end logistics services on a world wide scale. In this industry , collaboration among the players , that is , services providers , suppliers , customers and competitors is an essential innovation which can assist in improve responsiveness and reduce waste . For instance, the application of shared services like consolidation, warehousing and transport enables more efficient use of resources by various 3PL firms while backhauling assist in minimizing empty running. Collaboration among competing firms in the industry has also involved forming alliances especially for SMEs so that they can gain a higher competitive edge. An example is the creation of parallel networks which comprises of independent providers of logistic services whose collaboration result to small consignments distribution and provision of extra value added services. Other forms of administrative innovation that are aimed at sustainability includes introduction of organizational structural changes. For example,
