As a third-party logistics (3PL) provider, your clients trust you to fulfill customer orders quickly, efficiently, and accurately. Order fulfillment is an integral part of any business’s operations, and if you want to keep your clients happy, you’ll need to do it well.
Order fulfillment is a multistage process that starts when the customer places an order. From there, the items in the order are picked and packed, then processed for shipping. Though this process may seem simple, there is a lot of data involved, and the slightest hitch at any stage of the process could throw the entire thing off. This is where 3PL software comes into play.
Hiring a third-party logistics company to manage your inventory and order fulfillment provides you access to 3PL software that can automate and streamline these processes. Not only will it save you time and headache, but it could save your company money as well. Keep reading to learn more about 3PL software and how to choose the right one.
The Three Types of Logistics Management Software
In the days before the internet, companies were forced to manage their inventory and order fulfillment processes manually. Though third-party logistics was an option, different pieces of the supply chain puzzle operated independently which resulted in a wide margin for error. Modern technology has made it possible to not only streamline but integrate and automate the various aspects of order fulfillment through various types of 3PL software.
Here are the three primary types of 3PL software you may come across:
- Standalone Warehouse Management Systems (WMS)
- Enterprise Resource Planning (ERP) Systems
- Integrated CSM Suites
Now, let’s take a closer look at each of these options in greater detail.
1. Standalone Warehouse Management Systems
Standalone warehouse management system (WMS) systems exist to increase the productivity and efficiency of warehouse operations. By speeding up work routines and streamlining the picking, packing, and shipping process, WMS can save companies a lot of money. In simple terms, a warehouse management system is a type of software that enables companies to control and administer various warehouse operations beginning with receiving materials or products at the warehouse and ending when an order is filled and shipped.
Though each WMS is different, there are some features which most software solutions have in common. The first is warehouse design which helps customize the workflow to maximize storage space and to streamline picking and packing. This type of software can also inventory, generate packing lists, and send shipping notifications to customers. WMS solutions may even help with labor management as well as reporting.
2. Enterprise Resource Planning (ERP) Systems
While it is easy to imagine what functions warehouse management systems provide based on the name alone, things are not quite so clear with enterprise resource planning (ERP) systems. To put things simply, ERP systems integrate all of the various processes that are essential to running a business. This includes things like inventory, order fulfillment, accounting, human resources (HR), and customer relationship management (CRM).
Though each system has its differences, they all feature a shared database that employees in different division (such as accounting or sales) can all access the information they need to fulfill their roles. By utilizing a shared database, ERP software offers synchronized reporting and automation. In order to generate a report, employees will be able to pull data from one system instead of manually merging information from separate spreadsheets and databases. This streamlines processes across the board and increases both accuracy and efficiency.
3. Integrated SCM Suites
The process that begins with product development and ends with order delivery is called the supply chain. Supply chain activities include everything from product development and production to warehousing, inventory management, and shipping. A supply chain management (SCM) system is a set of software tools that manages and oversees this process, tracking the flow of goods, data, and financial assets as the product moves from production to its final destination with the customer.
Early supply chain models were specialized for certain supply chain activities such as procurement, transportation management, or manufacturing. Though these solutions resulted in improvements to the supply chain system, they were still limited – manual effort was required to transport information from one part of the supply chain to the next. Modern SCM suites integrate all supply chain activities for greater visibility, agility, and security as well as lower operational costs, better ease of use, and improved collaboration among different aspects of supply chain management.
What Are the Benefits of Using 3PL Software?
The success of your business is largely determined by customer satisfaction. The modern customer wants their orders to be fulfilled quickly and accurately, and they want to be able to track their orders throughout the fulfillment and shipping process. For very small businesses, these operations can often be managed in-house but for larger businesses, outsourcing the order fulfillment process to a third-party logistics provider is the best way to ensure accuracy and efficiency.
Here are some of the benefits associated with using 3PL software:
- Time saved through automation. By integrating and automating different aspects of the supply chain process, 3PL can save both providers and their clients a great deal of time. Orders and payments are tracked automatically, and it is easy to generate reports and invoices all from one database rather than from separate spreadsheets.
- Reduced costs on both ends. Streamlining processes results in reduced costs for 3PL providers which can be passed on to their clients in the form of lower shipping costs, faster order fulfillment, and improved customer satisfaction.
- Lower risk for error. When different stages of the order fulfillment process are handled manually, there is a risk for error at each stage and when data passes from one stage to the next. With 3PL technology, all of the data is stored and integrated for greater speed and accuracy, both for the 3PL and for the businesses they serve.
- Customization and scalability. The beauty of 3PL software is that it can be customized and scaled to suit the needs of individual clients. This makes for no-hassle transitions if your company adds inventory, opens a new distribution center, or enters another market.
- Insight into your business. By integrating all of the various supply chain activities and tracking shipments, payments, and returns, 3PL software can give you a better view of your business. You’ll be able to track inventory, run performance reviews, and generate reports on command.
- Increased transparency. When you hand over your supply chain activities to a 3PL provider, you want to know that they are worthy of your trust. Having access to 3PL technology means that you can track the 3PL’s performance as well as your sales and inventory to make sure everything is on track.
- Improved customer service. Third-party logistics software has the capability to track orders and payments from beginning to end which means that your customers will be able to track shipments and make returns with ease. 3PL software also makes it possible to offer shipping benefits like same-day and two-day shipping.
Every business is unique, so making the switch to a 3PL provider may make sense more for some companies than for others. If you’re considering making to move to third-party logistics, keep reading to find out what you need to keep in mind when shopping for 3PL software solutions.
6 Things to Look for When Choosing 3PL Software
Finding the right third-party logistics provider is important because you’ll be handing over the management of one of the most integral parts of your business – order fulfillment. Making the wrong choice could end up costing your company money in the long run and, if things go really poorly, you might end up losing customers which could cause your business to suffer.
Here are 6 things you should look for when choosing 3PL software:
- Up-to-Date Technology – When handing over the reins to your company’s order fulfillment process, you want to make sure that the company taking over has the best technology on hand. Modern WMS technology can streamline and automate processes to reduce errors and costs.
- Scalable Functionality – The primary reason any company outsources to a 3PL provider is that their company has grown beyond their means to manage in-house. Your goal for your company is to keep growing, so choose a 3PL software that offers room for growth.
- Labeling Compliance – There are certain regulatory requirements when it comes to product packaging, and labeling – an experienced 3PL provider will know these requirements and have the technology to fulfill them.
- Multiple Client Architecture – Primarily a concern for 3PL providers rather than their customers, it is important to find 3PL software that can manage inventory and order fulfillment for multiple clients. For companies who use 3PL providers, 3PL software can be a benefit if there are multiple divisions within a single company.
- Billing Functions – A common feature in most 3PL technology solutions, billing functions are essential to ensure that invoices are never lost or left unpaid. This type of software helps automate putaway, receiving, storage, and shipping so that the charges for these services are always accurate and on-time.
- Great Value – Part of the reason for choosing a 3PL provider is that you don’t have to front the cost for WMS technology yourself. Look for a 3PL software that meets your needs but is still affordable and that offers additional features such as tracking payments.
Third-party logistics software solutions are just as diverse as 3PL providers themselves. If you are considering a switch to using a 3PL provider for the first time, it pays to take a closer look at the type of software the company uses. This will determine the kinds of services the 3PL provider is able to offer as well as the speed and accuracy of their order fulfillment processes. If you are a 3PL provider looking for a new software solution, the same features are important, but the primary goal is to keep your own costs down while maximizing efficiency and accuracy for your clients.
The Bottom Line
The benefits of 3PL software are undeniable. Whether you are a 3PL provider looking to streamline and automate your processes or a company looking to hand over control of order fulfillment, 3PL software solutions are the key to improving speed, accuracy, and customer satisfaction.
When it comes to choosing 3PL software, you need to consider your options. If you simply want to manage the day-to-day operations of your supply chain process more efficiently, a standalone warehouse management system may be adequate. If you hope to optimize all aspects of your supply chain beyond simple warehousing, however, an integrated SCM system may be more beneficial. If improved billing and reporting systems are your primary concern, an ERP-based product might be best.
The key to finding the right 3PL software is to really take the time to examine your company’s needs and to find a software solution to meet them. Don’t forget to include the option for customization and scalability as well.