Building an Automation Business Case for 3PLs

Flexible Automation for Third-Party Logistics

Third-party logistics (3PL) companies continue to be one of the fastest-growing sectors of the logistics industry. 3PLs offer an attractive alternative to traditional warehouse operations, where a company outsources its entire inventory, distribution and shipping operations.

While 3PLs have many of the same challenges as conventional distribution centers (DC), 3PLs also have unique issues such as service level agreements (SLAs), multiple client requirements, accurate reporting systems, ERP and value-added software integration and the availability of labor. 3PLs also carry the weight of caring for and managing inventory and customer satisfaction for their contracted partners and transparency in their operations.

With the demand for 3PLs continuing to rise, the 3PL market was valued at $1,142.7 billion in 2024; by 2032, it is expected to rise to $2,546 billion¹ making facility planning and operational design essential. Optimized facilities and flexible automation paired with scalable operations can lead to growth as new customers and contracts are acquired.

A recent 3PL study and survey² found that 3PLs ranked the following technologies, systems or tools as the most important to successfully serve customers in 2026:

• Advanced analytics
• Sustainable supply chain
• Network optimization
• Artificial intelligence/machine learning
• Digital supply chain
• Visibility
• Robotics and automation

3PLs are turning to technologies that can capture and analyze accurate, real-time data to improve productivity, enable predictive analytics, broaden visibility and strengthen agility and resilience. It’s important to work with a partner that can help you justify the right automation for the right processes, using best-in-class automation and software solutions.

Building a Business Case for Automation on a Greater Scale

While the need to automate and apply organizational best practices exists in any size operation, there are several factors to consider when moving to a higher degree of automation and complexity.

Culture and staff adoption, integration plans and capital and operational costs must be weighed when creating a business case for an organization’s leadership to consider before investing.

Delivering a clear business case that can answer questions on costs and ROI, as well as expected performance and long-term savings, is essential.

The Goods-to-Person Solution for 3PLs

With the unique needs of a 3PL and the changing supply chain landscape, a goods-to-person (GTP) system is a good fit for expanding operations with a new greenfield site or revitalizing an existing brownfield site. High-density storage, paired with a GTP station, can be an attractive automated solution as it is scalable, eliminates laborious picking operations and creates operational efficiencies in productivity, accuracy, capacity and throughput.

A GTP solution consists of three main pieces of automation:

• Automated storage/retrieval system (AS/RS)
• A picking or goods-to-person workstation
• Conveyor or autonomous mobile robot (AMR) system

GTP Automated Process

1. 1.  Order received through warehouse management system software.
   2.  Order assigned to a picking station.
   3.  Product totes for order automatically brought to the picking station (AS/RS) by robots or shuttles.
   4.  Picker picks, scans and places product in order tote.
   5.  Product tote automatically sent back into AS/RS to be stored.
   6.  When order is complete, the picker places the order tote on a conveyor or AMR.
   7.  Order travels to pack and ship station.

While automating most processes within the four walls of the warehouse will improve productivity and throughput, a GTP solution can magnify the benefits for a 3PL. As SLAs become more inflexible and filled with performance penalties for not meeting expected levels and delivery times, a GTP system allows an operator to scale up for peak by offering more SKUs significantly increasing order fulfillment time while controlling inventory with less dependence on temporary or seasonal labor.