4PLs have gained a lot of popularity in the last decade. The popularity of a 4PL model shows its merit. In this, a 4PL player manages the supply chain of the company end-to-end. They act as a central coordinator for all the supply chain & logistics activities of the company. The 4PL model goes much beyond the conventional Third-Party Logistics (3PL) model by offering comprehensive and integrated solutions to optimize the supply chain.
4PLs offer various services under one roof, such as transportation management (TMS), warehousing (WMS), inventory control, order fulfillment, supply chain design, IT systems integration, and supplier management.
4PLs significantly influence all parts of the supply chain. One prominent trend is the integration of Fourth-Party Logistics (4PL) services with warehousing. This combination offers substantial advantages for supply chain management.
When integrated with warehousing, 4PL services provide a powerful solution that enhances operational efficiency, streamlines inventory management, and ensures the effective delivery of goods.
In this article, we will discuss five key insights on how 4PLs improve warehousing efficiency in Europe:
1. Advanced Warehouse Management Systems (WMS)
WMS has become very popular in modern warehouses. The global market of WMS is growing at a CAGR of 16%. 4PLs use state-of-the-art Warehouse Management Systems (WMS) to run and optimize warehouse processes.
Modern WMS provides real-time visibility into inventory levels, order statuses, shipment tracking, and other critical warehousing-related information. And when integrated with other systems such as TMS, Planning Systems, Dock Scheduling, and Yard Management, WMS unlocks excellent value and visibility for the company.
4PLs provide a significant edge in such technology integrations, providing unmatched visibility in the supply chain. This enhanced visibility allows for precise inventory management, reducing the risk of overstocking or stockouts.
Apart from the excellent visibility, WMS provides:
- Improved Accuracy: Automated data capture and tracking that reduces human errors. Such accuracy improvements lead to more accurate inventory counts and order fulfillment.
- Enhanced Productivity: WMS systems streamline workflows, from receiving to picking, packing, and shipping, boosting overall productivity.
2. Automation and Robotics
One more aspect where 4PLs add great value is using automation and robotics in warehousing.
Automation and robotics can amplify a warehouse’s output by many times. But they are not cheap. It is hard for a company to invest in these cutting-edge technologies due to high costs on its own. That’s not all the constant need for upgrading adds more burden.
4PLs use automation and robotics extensively in their operations now. This move transforms warehousing operations and reduces labor costs. The impact is significant from the start. 4PLs adopt these technologies to streamline picking, packing, and sorting processes.
4PLs justify the high costs of these technologies by using them for multiple clients, creating economies of scale.
Once the automation is stabilized, it provides immense benefits, like:
- Faster Order Processing: Automated systems can process orders much faster than manual methods. This brings down the order lead times and improves customer satisfaction.
- Cost Savings: Automation reduces reliance on manual labor, leading to significant long-run cost savings. This can become a critical factor for businesses in Europe due to the high labor cost in most countries.
- Consistency and Reliability: When robots and automated systems perform any tasks, consistency and accuracy are always high. This reduces errors and rework, making it cheaper to operate.
Several 4PL providers in Europe have implemented automated guided vehicles (AGVs) and robotic picking systems in their warehouses. These technologies have increased throughput by 30% and reduced operational costs by 25%.
3. Strategic Location and Network Optimization
The location of warehouses is crucial. Companies must balance costs and proximity to customers to minimize costs. 4PLs have a solution for this as well. 4PLs now use sophisticated network optimization tools to identify the best warehouse locations based on proximity to major suppliers and customers, transportation infrastructure, and labor availability.
When companies invest independently, it is significantly difficult to scale up or down as demand changes from a particular region. This is where 4PLs become great partners, allowing quick scaling up or down as needed with minimal notice. This adds agility to the operations and provides a competitive edge for the company.
It helps the companies to:
- Reduced Transportation Costs: Better locations with shared services help reduce costs.
- Improved Service Levels: Faster delivery times due to the proximity to customers translate to improved service levels and higher customer satisfaction.
- Change Scale: 4PLs can quickly scale operations up or down based on demand, ensuring flexibility and responsiveness.
For instance, WIIMA helped LEDiL to identify its warehouse location by relocating facilities closer to major urban centers. This move resulted in a 15% reduction in transportation costs and a 20% improvement in delivery time while improving the sustainability of the operations. This brings us to our next point.
4. Sustainability Initiatives
Sustainability is becoming immensely important in warehousing operations. In addition, the EU’s laws on sustainability are becoming increasingly difficult to comply with.
To address this, 4PLs are constantly investing in green practices and technologies to reduce their environmental footprint and comply with stringent European regulations.
There are different sustainability initiatives in warehousing that 4PLs are driving, such as:
- Energy Efficiency: 4PLs invest in clean energy. Their warehouses have energy-efficient lighting, heating, and cooling systems to reduce energy consumption. This benefits in long-term cost saving as well.
- Waste Reduction: 4PLs invest in recycling programs and try to reduce packaging waste. This helps to minimize the environmental impact.
- Sustainable Materials: There are so many sustainable options available in packaging today. 4PLs have expert teams to help companies develop eco-friendly materials for packaging. This helps and contributes to the sustainability goals of the company.
5. Integrated Technology Solutions
The supply chains globally have become integrated. This adds a lot to the visibility which enables faster and more accurate responses to any abrupt situations. 4PLs offer integrated technology solutions that connect all aspects of the warehousing in the supply chain, from suppliers to end customers. These solutions enable seamless communication and stakeholder collaboration, leading to more efficient warehousing operations.
Warehousing often struggles with isolating information from other parts of the supply chain. For example, changes in regulation in one of the EU countries can delay shipments. Without the power of the integrated technology of the 4PLs, the companies will face costly detentions and demurrages. 4PLs, with their integrated solutions, provide:
- End-to-End Visibility: Integrated systems provide end-to-end visibility into the supply chain, allowing for better coordination and decision-making.
- Enhanced Collaboration: Improved communication between suppliers, warehouses, and customers leads to more efficient and streamlined operations.
- Data-Driven Insights: Advanced analytics and reporting tools provide valuable insights into warehouse performance, helping identify areas for improvement.
Make your warehousing efficient with WIIMA
A 4PL may help European businesses significantly enhance their warehousing capabilities. Today’s 4PLs, like WIIMA, leverage advanced technologies, automation, strategic location optimization, sustainability programs, and integrated technology solutions. These gains translate to reduced prices, increased service levels, and a far more tenacious and responsive supply chain.
Partnering with a 4PL like WIIMA offers strategic value to businesses looking to optimize warehousing operations. WIIMA’s years of supply chain expertise, cutting-edge technology, sharp focus and understanding of EU markets, and sustainability focus make it the perfect partner for warehousing excellence in complex European marketplaces.
Find out how WIIMA can improve your warehousing and supply chain operations. Contact us today for a tailored 4PL solution and begin the journey to a more efficient and sustainable future.
