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The Strategic Advantage of First-Party Data Over 3PL Telematics

Dom finn

Author: Dominic Finn, CPO

Published: May 2024

Contact: LinkedIn

Editorial
Goods on a crate

Manufacturers / distributors: The Strategic Advantage of being carrier and 3PL agnostic

In the world of logistics, the reliance on third-party logistics (3PL) providers and carriers to handle supply chain tracking and data reporting has been a common practice. However, as the sophistication of technology advances and the stakes in supply chain management increase, manufacturers and other producers of goods are recognizing the benefits of harnessing first-party data over 3PL telematics. This shift is not just about data control but about gaining strategic business advantages.

The Pitfalls of Relying Solely on 3PL Telematics

  • Data Control and Integration: When companies rely on 3PL telematics, they are dependent on external parties for critical data that can influence decision-making. This relinquishes control over the timing, accuracy, and granularity of the data received (think pallet level tracking vs Truck / Railcar level tracking).
  • Customization and Flexibility: Third-party systems often require manufacturers to adapt their processes to the tools and reports provided, which might not align perfectly with their operational needs or data analytics frameworks.
  • Data Security and Confidentiality: Using 3PL telematics increases the risk of data breaches or misuse as the data passes through and is stored by multiple third-party systems. Having one 1st party data partner is easier to manage and to verify.
  • Vendor Lock-in and Compatibility Issues: With 3PL telematics, companies might find themselves locked into specific technology platforms outside their key tools such as SAP, making it difficult to switch providers or integrate with other systems without significant costs or technical challenges.
  • Fraud Detection and Shipment Integrity: Relying on third-party reporting can obscure visibility into the actual handling of shipments, increasing the risk of fraud or tampering.

Advantages of First-Party Data Access

  • Complete Control: Owning the data collection process ensures that the data is timely, accurate, and tailored to specific needs, which is crucial for dynamic decision-making.
  • Seamless Integration: First-party data systems can be designed to integrate seamlessly with internal ERP, CRM, and supply chain management systems, enhancing data utility and operational efficiency. You don't change the system you have invested millions in.
  • Real-Time Monitoring and Adaptation: Companies can set up their monitoring systems to operate on their preferred schedules and use real-time data to adapt quickly to any logistical challenges or opportunities.
  • Carrier Agnosticism: Companies are not tied to any specific logistics provider and can switch providers without disrupting their data flows or having to implement new systems.
  • Advanced Technologies and Custom Solutions: First-party logistics access allows companies to leverage advanced technologies like IoT, AI, and blockchain for enhanced tracking, predictive analytics, and secure, transparent operations.
  • Unified Multi-Modal Supply Chain Management: Owning their own tracking devices allows companies to avoid the complexities and integration challenges associated with using multiple 3PLs across different transport modes. The tracking device accompanies the shipment through all stages, ensuring continuous and consistent data flow.
  • Increased Supply Chain Resilience: By being carrier and 3PL agnostic and sidestepping the need for data aggregators, companies own their own supply chain data, this not only simplifies operations but also significantly enhances the resilience of the supply chain against disruptions and external dependencies. This adaptability is crucial in today's volatile market environment, as discussed in a recent analysis by Logistics Management here.

Practical Implementations

  • System Loco’s IoT Solutions: System Loco provides advanced IoT solutions for asset tracking that enhance visibility and control for manufacturers. Their LocoTag technology, for instance, allows for precise monitoring of environmental conditions and asset locations, which can be integrated directly into corporate systems without intermediary 3PL data handlers.
  • Enhanced Anti-Fraud Features: Technologies like the LocoTrack HGD4 with light sensors ensure that shipments are not tampered with, providing immediate alerts if shipment integrity is compromised.
  • Multi Modal and Multi Country: System Loco devices like the LocoTrack HGD4 are shipped with goods from all over the world to the US. They follow a shipment through boats, rail, truck, warehouse, cross docks all the way to the destination, providing data back to you the entire way.
  • The full story: The LocoTrack HGD4 can report vibration and orientation, raising critical alerts back to you directly. carriers and 3PL do not have the granularity of data to report on the condition of goods.

Customer Example: The Laptop Manufacturer

The specific example of this is a large laptop manufacturer. When relying on 3rd party data to ship goods from Asia, they rely on: 3rd party system data, scanning waypoints and vehicle telematics, they know an update of a shipment when it hits the next way point or when the shipment is in transit and it's been scanned and agreed to be in a specific truck. They don't actually know their shipment is in a truck but the paperwork corresponds with it. They get informed of the whereabouts of the shipment at the cadence of each partner in the journey, some more often some not at all. If a pallet containing goods is knocked over during transportation and goods damaged, they will not be able to tell until it reaches the destination.

With a HGD4 device placed into the shipment, for example wrapped with the pallet, the manufacturer can understand the cadence of reporting during the entire journey, they see their own goods at the granularity they choose (per pallet for example) and they are able to monitor and log the condition of their specific goods all the way through the journey. In addition to this, they don't need to integrate with multiple systems, log into different carrier platforms or use a Shipping aggregator. This data can be pushed directly into their system. Need a security / visibility partner? The manufacturer can control directly which vendor receives their data (System Loco has a number of close partnerships with visibility and security providers).

If the Logistics and supply chain teams at the manufacturer want to analyze the data, it's as simple as pushing their first party data into their chosen warehouse), they don't have to be locked in with a data aggregator.

Efficiently Packed Goods

While 3PL providers will always to play a significant role in global logistics, the trend towards first-party data access is clear. For manufacturers looking to maintain a competitive edge, investing in their own data management technologies ensures they remain agile, responsive, and secure in a rapidly evolving market. By prioritizing first-party data, companies not only protect their assets but also empower themselves with the insight needed to drive future growth and efficiency. For more detailed information on how advanced tracking technologies can benefit your operations, please visit System Loco.

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