Feb 16, 2023 | Blog
Streamlining operational processes and maximizing efficiency is critical to a successful business model. Using 3PL Inventory Management Software, companies can manage their products and receive orders accurately – all while maintaining oversight of their entire supply chain system! Read more about how this innovative technology helps businesses flourish.
What is a 3PL Inventory System?
A 3PL (Third-Party Logistics) inventory system offers a sustainable cost-saving solution for businesses that may otherwise have difficulty managing and maintaining their inventory. By outsourcing these tasks to a third-party logistics provider, companies gain access to specialized resources, including advanced inventory management tools and tracking systems.
The advantages of using a 3PL inventory system are numerous, from reducing overhead costs to freeing up internal resources for more strategic projects. Ultimately, this system can maximize efficiency and optimize processes for higher-quality outcomes.
What is 3PL Inventory Management Software?
3PL inventory management software provides various tools and features to help third-party logistics providers manage a company’s inventory more effectively. These solutions streamline processes, providing an integrated and automated business workflow for receiving and tracking inventory, managing orders, creating shipping labels, and producing reports.
The software also brings real-time inventory management visibility into inventory levels from an array of data points, so companies can take advantage of important reorder points or unintentionally order beyond their needs. This offers companies greater efficiency in their supply chain operations and order fulfillment services.
Benefits of 3PL Inventory Management Software
Using 3PL inventory management software has numerous advantages to help your business grow. When utilizing this software, you can enjoy improved accuracy, efficiency, visibility, cost savings, scalability, and flexibility. With real-time data tracking of your inventory levels, you can reduce stockouts or overstock by making informed decisions promptly. Outsourcing your warehouse and inventory management saves costs associated with maintaining them within your organization. Furthermore, the software is designed to quickly scale up or down as needed to accommodate business growth or seasonal fluctuations in demand. And it is also very customizable so that no matter what your business needs are, the software has you covered!
Reduced Costs on Both Ends
3PL (Third-Party Logistics) inventory software allows providers to manage and track their inventory, which can help to reduce costs in several ways. For example, the software can help to minimize stockouts by providing real-time visibility into inventory levels, which can help to avoid lost sales and the need to rush-order items.
Additionally, the software can help to optimize inventory levels by providing insights into sales trends and demand patterns, which can help to prevent overstocking. This can reduce storage costs and minimize the risk of obsolete inventory.
For clients, using 3PL inventory software can also help reduce costs by providing real-time visibility into inventory levels and delivery status. This helps to improve planning and forecasting, which helps avoid stockouts and minimize the need for emergency shipments.
Additionally, the software can optimize order processing and fulfillment, which helps to speed up delivery times and reduce transportation costs.
Time Saved Through Automation
3PL (Third-Party Logistics) inventory software can save time by automating many tasks involved in managing and tracking inventory. Some examples of the basic capabilities of automation include:
- Automated inventory tracking: The software can automatically update inventory levels and track stock movements in real time, eliminating the need for manual data entry and reducing the risk of errors.
- Automated ordering: The software can automatically generate purchase orders based on predefined reorder points, reducing the need for manual order placement.
- Automated receiving and put away: The software can automatically process receiving and put away transactions using barcode scanning and RFID technology, reducing the time required for manual data entry and searching.
- Automated picking and packing: The software can automate the pick and pack process and optimize it for speed, accuracy, and efficiency by using different techniques such as wave picking, zone picking, and more.
- Automated shipping: The software can automatically generate shipping labels and documents, reducing the time required for manual data entry and preparation.
- Automated reporting: The software can automatically generate real-time reports on inventory levels, stock movements, sales trends, and more, providing users with the data they need to make informed decisions quickly.
Overall, the automation features of 3PL inventory software can streamline inventory management, improve efficiency, and save time by reducing the need for manual data entry and repetitive tasks.
Customization and Scalability
3PL (Third-Party Logistics) inventory software can offer customization and scalability in several ways:
- Customizable workflows: Many 3PL inventory software solutions offer customizable workflows that can be configured to match the specific needs and processes of the user. For example, the software can be configured to handle different types of inventory, such as serialized or lot-controlled items, and can be configured to handle different types of transactions, such as receiving, put away, picking, packing, and shipping.
- Customizable reports: Many 3PL inventory software solutions offer customizable reporting capabilities that allow users to create reports tailored to their specific needs. Users can create reports that provide real-time data on inventory levels, stock movements, sales trends, and more.
- Scalability: 3PL inventory software is designed to scale with a company’s growing needs. It can handle different inventory volumes, transactions, and several users. Many software solutions can be easily integrated with other systems and configured to support multiple locations, which can help support a business’s growth.
- Integration with other systems: 3PL inventory software can be integrated with other systems such as accounting, CRM, WMS, TMS, and more. This can help streamline processes and improve efficiency by eliminating manual data entry and reconciliation.
Overall, 3PL inventory software can offer customization and scalability by providing customizable workflows, reporting capabilities, scalability, and integration with other systems, which can support a business’s growth and changing needs.
Lower Risk for Error
3PL (Third-Party Logistics) inventory software can offer lower risk for error in several ways:
- Automated inventory tracking: By automatically updating inventory levels and tracking stock movements in real-time, the software eliminates the need for manual data entry, reducing the risk of errors.
- Barcode and RFID scanning: By using barcode and RFID scanning technology, the software can automatically process receiving, put away, picking, and packing tasks, which can help to ensure accuracy and reduce the risk of errors.
- Real-time visibility: The software provides real-time inventory management visibility and stock movements, which can help minimize stockouts and overstock, reducing the risk of errors in inventory management.
- Error checking: The software can include features that automatically detect and alert users to potential errors, such as duplicate or missing data.
- Customizable workflows: By offering customizable workflows that can be configured to match the specific needs and processes of the user, the software can help to reduce the risk of errors by ensuring that procedures are followed correctly.
- Audit trails: The software can also provide an audit trail of all transactions, which can be used to identify and correct errors and track inventory movements.
Overall, by providing automated inventory tracking, barcode, and RFID scanning, real-time visibility, error checking, customizable workflows, and audit trails, 3PL inventory software can help to reduce the risk of errors in inventory management.
Insight into Your Clients’ Business
3PL (third-party logistics) inventory software can give insight into a client’s business by providing detailed information about their inventory levels, sales data, and shipping and receiving information. This can include real-time tracking of inventory movements, alerts for low stock levels, and reporting on sales trends and customer behavior.
The software may also provide information on the cost and efficiency of logistics operations, allowing the client to identify areas for improvement and make informed decisions about their supply chain management. Overall, 3PL inventory software can provide valuable insights into clients’ business complex operations and help them optimize their inventory and logistics processes.
How Does 3PL Software Help eCommerce Businesses?
Cost Reduction
3PL (third-party logistics) software can help online retailers’ businesses with cost reduction in several ways:
- Automation of logistics processes: 3PL software can automate many logistics processes, such as order processing, shipping, and tracking, which can help reduce labor costs.
- Route optimization: 3PL software can optimize logistics routes to minimize transportation costs.
- Volume discounts: 3PL software can help eCommerce businesses negotiate volume discount rates with logistics providers, reducing shipping costs.
- Inventory management: 3PL software can provide real-time inventory tracking and management, helping eCommerce businesses avoid stockouts and overstocking, which can reduce inventory carrying costs.
- Reduced errors: 3PL software can help reduce mistakes in logistics processes, saving money by reducing the need for rework and returns.
Increased Transparency
3PL (third-party logistics) software can help online retailers’ businesses increase transparency in several ways:
- Real-time tracking: 3PL software can provide real-time tracking of orders and shipments, allowing eCommerce businesses to monitor their logistics processes and provide accurate delivery estimates to customers.
- Inventory management: 3PL software can provide real-time inventory tracking, allowing eCommerce businesses a clear view of their inventory levels.
- Data analytics: 3PL software can provide data analytics and reporting capabilities, allowing eCommerce businesses to gain insights into their logistics processes and identify areas for improvement.
- Electronic data interchange (EDI): 3PL software can integrate with EDI systems, allowing eCommerce businesses to exchange data with logistics providers and other partners in a standardized format, increasing transparency and reducing errors.
- Access to information: 3PL software can provide a centralized platform that allows eCommerce businesses to access all the information they need about their logistics processes in one place, increasing transparency and making it easier to identify issues and make decisions.
Customer Experience
3PL (third-party logistics) software can help eCommerce businesses improve customer experience in several ways:
- Real-time tracking: 3PL software can provide real-time tracking of orders and shipments, allowing eCommerce businesses to provide accurate delivery estimates to customers and keep them informed about the status of their orders.
- Automation of logistics processes: 3PL software can automate many logistics processes, such as route optimization, order processing, shipping, and tracking, which can help reduce the chances of errors and improve delivery times.
- Inventory management: 3PL software can provide real-time inventory tracking and management, helping eCommerce businesses avoid stockouts and overstocking, which can improve availability and reduce delivery times.
- Returns management: 3PL software can automate returns management processes, making it easier for customers to return items and reducing the time it takes to process returns.
- Customer service: 3PL software can integrate with customer service platforms, providing customer service representatives with the information they need to quickly and accurately resolve customer inquiries and complaints.
Real-Time Visibility
3PL (third-party logistics) software can help eCommerce businesses gain real-time visibility into their logistics processes in several ways:
- Real-time tracking: 3PL software can provide real-time tracking of orders and shipments, allowing eCommerce businesses to monitor the status of their logistics processes and respond quickly to any issues.
- Inventory management: 3PL software can provide real-time inventory tracking, allowing eCommerce businesses to have a clear view of their inventory levels and to make informed decisions about inventory management.
- Data analytics: 3PL software can provide data analytics and reporting capabilities, allowing eCommerce businesses to gain insights into their logistics processes and identify areas for improvement.
- Electronic data interchange (EDI): 3PL software can integrate with EDI systems, allowing eCommerce businesses to exchange data with logistics providers and other partners in a standardized format, increasing transparency and reducing errors.
- Access to information: 3PL software can provide a centralized platform that allows eCommerce businesses to access all the information they need about their logistics processes in one place, increasing visibility and making it easier to identify issues and make decisions.
The Three Types of Logistics Management Software
Warehouse Management Systems
Warehouse management software (WMS) is a third-party logistics software application that helps businesses manage and track inventory levels, orders, sales, and deliveries within a warehouse or distribution center. It is designed to support the day-to-day operations of a warehouse by providing real-time data and insights on inventory levels, stock movements, and order fulfillment.
A warehouse management system can also be integrated with other systems, such as transportation management systems (TMS) and supply chain management systems (SCM), to provide a more comprehensive view of the entire supply chain.
Some key features of a WMS include inventory tracking, barcode scanning, order fulfillment, and real-time data reporting. It also helps to improve warehouse efficiency, reduce labor costs, and increase customer satisfaction by providing accurate and timely information.
SCM Suites
SCM suites are software solutions that provide businesses with a comprehensive view of their supply chain. They typically include a combination of different software applications, such as transportation management systems (TMS), warehouse management systems (WMS), and enterprise resource planning (ERP) systems, that are integrated to provide a seamless and unified view of all supply chain activities.
SCM suites are designed to help businesses manage and optimize the flow of goods, services, and information from suppliers to customers. They can help companies to automate and streamline supply chain processes, such as demand forecasting, production planning, inventory management, transportation management, and order fulfillment. SCM suites can also provide real-time data and insights on supply chain performance, enabling businesses to make data-driven decisions and improve their overall supply chain efficiency.
ERP Systems
Enterprise resource planning (ERP) systems are software solutions that help businesses manage and automate their core business processes. They are designed to integrate and streamline various business functions, such as finance, accounting, human resources, procurement, and manufacturing, into a unified system.
ERP systems typically include modules for managing financials, accounting, procurement, manufacturing, inventory, and sales, among others. They also provide real-time data and insights on business performance, enabling businesses to make data-driven decisions and improve their overall efficiency.
ERP systems can help businesses automate and streamline operations, improve data accuracy and visibility, and increase efficiency and productivity. They can also help companies to manage and control their financials, including budgeting, forecasting, and reporting.
ERP systems can be deployed on-premises or in the cloud and can be customized to meet the specific needs of a business. Some examples of ERP systems include SAP, Oracle, Microsoft Dynamics, and Infor.
Key Differences
WMS (Warehouse Management Systems), SCM (Supply Chain Management Systems), and ERP (Enterprise Resource Planning Systems) are all software solutions that help businesses manage and automate various aspects of their operations. However, they each have distinct areas of focus and functionality:
- WMS: A Warehouse Management System (WMS) primarily focuses on managing and tracking inventory levels, orders, sales, and deliveries within a warehouse. It provides real-time data and insights on inventory levels, stock movements, and order fulfillment.
- SCM: A Supply Chain Management System (SCM) is focused on the planning, execution, and control of the flow of goods, services, and information from suppliers to customers. It helps businesses manage and optimize the entire supply chain, including demand forecasting, production planning, inventory management, transportation management, and order fulfillment processes.
- ERP: An Enterprise Resource Planning (ERP) system is focused on managing and automating a business’s core business processes across multiple departments, such as finance, accounting, human resources, procurement, and manufacturing. It provides a unified view of all business operations and helps businesses automate and streamline their operations, improve data accuracy and visibility, and increase efficiency and productivity.
In summary, WMS deals primarily with warehouse and shipping operations, SCM deals with the entire supply chain management, and ERP deals with the core business operations across multiple departments in an organization.
Key Takeaways
Some key takeaways from 3PL Inventory Management Software include:
- Real-time inventory visibility: 3PL Inventory Management Software provides real-time data and insights across multiple locations, enabling businesses to make data-driven decisions and optimize their inventory levels.
- Automated order fulfillment software: 3PL Inventory Management Software can automate receiving, processing, and shipping orders, reducing errors and increasing efficiency.
- Integrated with transportation management systems: 3PL Inventory Management Software is often integrated with transportation management systems (TMS) to provide a more comprehensive view of the entire supply chain, from inventory to delivery.
- Improved logistics and supply chain operations: 3PL Inventory Management software can help businesses improve their logistics and supply chain operations by streamlining processes and increasing efficiency.
- Scalable and flexible: 3PL Inventory Management software is often flexible and scalable, allowing businesses to adapt and grow their operations as needed.
- Cloud-based and accessible remotely: Many 3PL Inventory Management software are cloud-based and can be accessed remotely, enabling businesses to manage their inventory and logistics from anywhere.
3PL Inventory Management Software FAQs
Is 3PL Software?
3PL, or Third-Party Logistics, refers to using a third-party logistics provider to outsource logistics and distribution functions for a company. It is not software but a business service that can be managed through software. Examples of logistics software include cloud-based warehouse management solutions and transportation and supply chain management systems.
What Is the Role of 3PL?
The role of a 3PL or third-party logistics company is to outsource logistics and distribution functions for a company. This can include warehousing, transportation, inventory management, etc.
By using a 3PL, companies can focus on core competencies and leave logistics to experts. 3PLs often have economies of scale and access to resources that allow them to provide logistics services more efficiently and at a lower cost than the company could.
What Does a Warehouse Management System Do?
A warehouse management system (WMS) is a software application that helps companies manage and optimize their warehouse operations. It helps to automate and streamline processes such as inventory management, order fulfillment, shipping and receiving, and more.
The main functions of a smart warehouse management system include the following:
- Inventory management: tracking the location, quantity, and status of products in the warehouse.
- Order fulfillment software: automating the process of picking, packing, and shipping orders.
- Shipping and receiving: tracking and managing inbound and outbound shipments.
- Barcode scanning and RFID: Automating data capture for inventory management and tracking.
- Reporting tools and analytics: Generating reports and metrics on warehouse performance and inventory levels.
- Automated Storage and Retrieval Systems (ASRS) and Conveyor systems integration.
A warehouse management system can help companies improve the accuracy and efficiency of their warehouse operations, reduce costs, and improve customer service.
Apr 21, 2023 | Blog
Embarking on the journey of international shipping can feel like navigating uncharted waters. With a plethora of regulations, customs duties, and potential costs, it’s easy to feel overwhelmed. But, with the right guidance and a comprehensive guide, you can make international package shipment sail smoothly.
This guide will provide you with insights into the world of international shipping, ensuring you’re well-equipped for your global business endeavours, whether you’re a small online store or a large e-commerce business or platform.
How To Ship Internationally
The art of international shipping involves a series of steps. Begin by identifying the origin and destination of your items. Ensure they’re permissible for international delivery and transit. Then, select a carrier that aligns with your needs, considering factors like rates, shipping services, and delivery times.
Whether you’re using UPS, USPS, or another such carrier or courier service, and whether your destination is Canada, Australia, or Italy, proper packaging and accurate customs documentation are crucial. Remember, international shipping comes with its own set of rules, so consulting with a shipping company or using resources like ShipHero’s discreet shipping guide can be invaluable.
Country Rules and Regulations
Each country has its own customs forms and own set of international shipping regulations. These can range from prohibited items to specific labelling requirements. For instance, while one country might ban certain goods, another might have unique requirements for food labels. To ensure compliance, delve into the details of regulations of your destination country. Most other countries and territories will have customs agencies that provide essential information. Additionally, resources like the World Customs Organization offer insights into international shipping norms. It’s also essential to stay updated on cross-border trade regulations and the global economy.
Pallets, Containers, and Cargo Shipment
The world of international shipping services offers various transportation methods. Pallets, typically made of wood or plastic, simplify the loading process of multiple packages. Containers, on the other hand, are sturdy boxes designed for long-haul transport. Depending on the nature of your shipped goods, you might opt for specialised containers, like those for perishable items. Cargo shipments, which encompass a range of items from cars to consumer goods, utilise cargo ships for transportation.
7 Tips for Shipping Internationally
- Invest in Quality Packaging: Ensure your items reach their destination undamaged with sturdy boxes and packing materials. Consider the size and weight of your items when choosing packaging materials.
- Declare Contents Accurately: Properly detailing the contents and value of your shipment can prevent customs delays.
- Double-Check Addresses: Ensure the recipient’s details are accurate to avoid delivery hiccups.
- Opt for Cost-Effective Shipping: International shipping can be pricey. Research to find the best shipping rates and services. Always keep an eye on prices and fees.
- Insure Valuable Goods: For peace of mind, consider insuring high-value items.
- Stay Updated: The world of shipping is ever-evolving. Stay informed about global shipping trends and changes in the trade landscape.
- Collaborate with a Freight Forwarder: A reliable freight forwarder can streamline the shipping process and offer competitive rates.
Overseas Shipping Cost
The intricacies of overseas shipping span from inventory management in the warehouse to delivery. Collaborating with a trusted shipping agent can simplify this process. Remember to consider transit times and to address potential destination restrictions. For instance, certain countries might have product restrictions or need extra customs documentation. With access to the right partner and tools like advanced tracking, you can ensure your customer has a seamless shopping experience.
Track Your Shipment
In today’s digital age, tracking shipments is more accessible than ever. By partnering with a reliable carrier or freight forwarder, for example, you can monitor your shipment or package’s journey in real-time. The feature is specially helpful if the shipment is urgent or the customer has specifically requested expedited shipping for the item. Keeping essential documents organised and at hand can also expedite any necessary interventions during transit. Utilise tracking numbers, online platforms, links, and even YouTube tutorials to understand the best ways to track your shipments effectively.
Shipping Restrictions
Shipping restrictions play a pivotal role in international trade and commerce. While most are aware of common prohibitions, it’s essential to understand the nuances of restricted shipping internationally for items.
Common Restricted Items:
- Hazardous Materials: These can range from chemicals, explosives, flammable liquids, gases, to radioactive materials. A clear understanding of what classifies as hazardous is essential since the packaging, and transportation of such materials demands extra caution.
- Alcohol: Due to various reasons, including cultural and religious considerations, age restrictions, and health concerns, many countries have strict regulations concerning the import of alcohol.
- Batteries: Especially lithium batteries, which have been known to catch fire. Many shipping companies have specific guidelines on shipping batteries, both within devices and as standalone units.
- Perishable Items: Items like fresh produce or meat products often face restrictions, requiring special packaging or rapid transit options.
Always consult with a shipping expert or the specific country’s customs department to understand the exhaustive list of restricted items for being shipped to your destination.
Import Taxes and Duties
Import Taxes and Duties represent the charges that the importing country’s government levies on foreign shipments. These fees are typically a percentage of the international shipment itself’s CIF value (Cost, Insurance, and Freight). They play a dual role – protecting domestic industries from foreign competition and generating revenue for the government.
- Valuation: The first step is to determine the shipment’s value. This can be based on transaction value or other methods if the transaction value isn’t determinable.
- Classification: Each product is assigned a Harmonized System (HS) code, which determines the rate of duty applicable.
- Duty Calculation: Using the HS code and the value, one can calculate the exact duty amount.
It’s vital to factor in these costs when pricing products and services for international customers or when considering shipping options.
Cultural Sensitivities
In international shipping companies, cultural nuances and sensitivities matter. Sending a product that’s taboo or offensive in the receiving culture can have adverse effects on business relationships and reputation.
- Religious Restrictions: For instance, sending pork products to predominantly Muslim countries, where pork is prohibited, can be a grave error.
- Symbolism: Some symbols, colours, or numbers might have negative connotations in certain cultures.
- Censorship: Some countries have strict censorship laws, banning the import of certain books, movies, or other media.
When doing business in a foreign country, always ensure you’re culturally informed to prevent unintentional faux pas.
Shipping Documentation
Shipping documentation is the backbone of international trade and shipping services. These documents act as a proof of transaction, facilitate the movement of goods, and ensure regulatory compliance.
- Bill of Lading: This is a contract between the shipper and the carrier, detailing the goods’ type, quantity, and destination. It acts as a receipt when the carrier delivers the goods.
- Commercial Invoice: This is a bill for the goods from the seller to the buyer. It’s vital for customs declaration and helps in the determination of the value of goods for the assessment of customs duties.
- Certificate of Origin: This document certifies the country in which the product was manufactured. It’s crucial for determining tariff treatments and ensuring that the goods aren’t coming from embargoed or sanctioned countries.
- Packing List: While similar to a commercial invoice, this document provides a detailed list of the contents of the shipment, including weight, dimensions, and item count.
Ensuring that all documentation is accurate and in order is key to preventing delays, penalties, or even seizure of goods at customs.
Key Takeaways
- International shipping is akin to exploring a new destination. Proper research and planning can ensure a smooth journey.
- Accurate documentation, quality packaging, and staying updated are crucial for successful international shipping.
- Collaborating with experts can simplify the process and offer peace of mind.
International Shipping FAQs
What is the cheapest international shipping?
Costs vary based on factors like destination address, shipment size, and method of transit. However, strategies like comparing rates, using promotions, and consulting with freight forwarders can help customers reduce costs.
What is the fastest international shipping?
Express shipping for packages, offered by carriers and packages like DHL and UPS, is typically the quickest. However, speed often comes at a premium price.
Is it easy to ship internationally?
While it can be complex business, with access to the right resources and knowledge, international shipping can be streamlined and efficient.
Dec 30, 2022 | Blog
Debating whether to use 3PL or 4PL can be challenging because only a few business owners know the difference. While both services may appear interchangeable, there are key differences in technologies, capabilities and typical applications.
If you want to introduce 3PL or 4PL into your supply chain management strategy, this guide will outline the major differences and how to choose the appropriate solution.
Logistics Terminology Explained
Whenever a customer purchases a product online, logistics providers become responsible for shipping them. Below are the different logistics services and what they offer.
First-Party Logistics (1PL)
First-party logistics (1PL) companies employ in-house freight carriers that transport goods and products from point A to point B. A 1PL transaction involves two parties: a manufacturer and a buyer.
For instance, a local farm (point A) might transport ingredients directly to a grocery store (point B).
Second-Party Logistics (2PL)
Second-party logistics (2PL) transport goods using owned assets, such as planes, boats or other vehicles. 2PLs are typically used in international shipping and wholesale goods.
For instance, a local farm might use an outsourced delivery service to ship ingredients to direct buyers.
Third-Party Logistics (3PL)
Third-party logistics (3PL) outsources delivery and additional services, including picking, packing and shipping. Some 3PL fulfillment services also offer warehouse management capabilities, such as real-time tracking, through connected software.
For instance, a local farm might use a 3PL solution to pack and ship goods, then deliver them to grocery stores more quickly.
Fourth-Party Logistics (4PL)
Fourth-party logistics (4PL) covers all supply chain management, including execution. 4PL providers, also known as lead logistics providers, act as consultants, giving the company feedback to improve operations.
For instance, a 4PL company might inform a local farm of changes in supply and demand, allowing them to make the necessary adjustments.
Fifth-Party Logistics (5PL)
Fifth-party logistics (5PL) or logistic aggregators employ highly advanced solutions – such as robots, automation, blockchain and Radio Frequency Identification (RFID) devices – to improve efficiencies within a company’s entire operation.
For instance, the same local farm might outsource all its logistics operations, focusing solely on production.
What Is a 3PL?
A 3PL, or third-party logistics company, ships products on behalf of a client. 3PLs act as an intermediary but do not take ownership of the imported products. A company might hire a 3PL provider if its supply chain becomes too complex to manage natively.
The types of logistics services a 3PL provides can range from warehousing to packaging and freight forwarding. Asset-based 3PL services directly manage a company’s resources to perform its services.
What Is a 4PL?
A 4PL, or fourth-party logistics company, controls a business’s entire supply chain strategy and has comprehensive oversight of warehouses, freight forwarders and shipping companies. A fourth-party logistics provider can make recommendations regarding changes to production and shipping strategies.
Hiring a 4PL company might make sense if you need more resources and staff to oversee transportation and other supply chain operations.
Differences Between 3PL and 4PL
While businesses have more hands-on involvement with a 3PL provider, there is an extra degree of separation with a 4PL provider. In addition, the relationship between companies and 3PLs might be more transactional than with 4PLs.
Below are other key differences between 3PLs and 4PLs.
Order Fulfillment
While 3PLs oversee fulfillment operations like warehousing, packing and shipping, 4PLs take it further by managing all supply chain activities. This includes transportation services, supply chain software and potential stopgaps in your process.
Supply Chain Optimization
Working with a 3PL can give your business the upper hand in supply chain optimization. 3PLs demand more client involvement, so you can still make the decisions you feel is best for your business. For example, you can optimize fulfillment by picking strategically located fulfillment centers close to your customers.
In addition, 3PLs provide clients with access to shipping data, increasing demand forecasting accuracy and enabling better-informed decision-making.
Storage Capacity & Delivery Footprint
Compared to 3PLs, 4PLs have a more extensive warehouse network, better storage capacity, and broader geographical coverage. In addition, 4PLs can store heavier items and provide more accurate lot tracking.
Financial & Operational Scalability
3PLs typically run more expensive than 4PLs because they demand longer-term contracts to cover daily order volumes. Not only do 4PLs run cheaper, but they also offer more flexible and scalable contracts – 4PLs are on-demand, charging clients only for the resources they use.
Customer Communications
Because 4PLs act as a business’s intermediary, all customer queries run through them before reaching you. This can cause significant delays.
Conversely, 3PLs work directly with merchants, allowing them to resolve issues quickly. Plus, 3PLs deploy the same customer service teams for businesses and merchants, which helps everyone stay on the same page and on top of customer demands.
Integrated Technology
While 3PLs can provide comprehensive warehouse management, they rarely offer the kind of advanced technology that a 4PL can. While both 3PLs and 4PLs use integrated warehouse management software (WMS), 4PLs often take their technological capabilities further with autonomous vehicles and robotics.
How the 3PL Process Works
While no two 3PLs are identical, these logistics service providers typically offer the following services:
- Transportation: 3PLs transport goods from warehouses to buyers. Occasionally, they might tap shippers like UPS, USPS and FedEx.
- Fulfillment and distribution: If necessary, a 3PL provider will manage warehouse operations, including storage, inventory tracking, rates and shipping strategies.
- Finances: 3PLs that provide cost control can lower freight forwarding rates. Financial 3PLs are more common with larger enterprises.
Advantages of 3PL
A third-party logistics service provider can make your supply chain more cost-effective and efficient. Below are a few other benefits you can reap from hiring a 3PL:
- Reduced operational costs: Outsourcing your logistics operations to an outside party is significantly cheaper than hiring an in-house team. You can pay for work as it is completed and invest more in core business processes like marketing and sales.
- Optimized space: If your warehouse is too small to stock all your inventory, hiring a 3PL eliminates the need to pay for a larger space. Instead, you can finance the space you need and scale as necessary, improving your business’s cash flow.
- Minimized inefficiencies: With the appropriate technology, 3PLs can increase speed and efficiency while reducing errors. By automating information transfer, your logistical operations become more accurate.
- Industry expertise: A reliable fulfillment provider has ample knowledge of the logistics industry and how best to reduce costs, increase savings and give your business a competitive edge.
Disadvantages of 3PL
3PLs may not be suitable for all businesses, as they can pose the following considerations:
- Forfeited control: Trusting a third-party fulfillment provider could be difficult, as you have to give up full control of the delivery process. In addition, guaranteeing a positive customer experience is challenging because you lack direct oversight.
- High upfront costs: Because most 3PLs adhere to a long-term strategy, investing in their services can be incredibly costly upfront.
How the 4PL Process Works
The goal of a fourth-party logistics service provider is to oversee your entire supply chain. To do so, it typically provides the following services:
- Transportation: A 4PL service will move your finished goods to one or more 3PL warehouses for distribution.
- Inventory management: 4PLs employ technology for real-time inventory tracking and provide better data visibility for merchants.
- Shipping: Most 4PLs provide last-mile shipping, which involves transporting packages from fulfillment centers to their final destination.
Advantages of 4PL
There are many reasons you might choose a 4PL company instead of a 3PL. Below are a few advantages that might convince you to hire these transportation providers:
- Comprehensive supply chain solution: With a 4PL, you’ll get a single point of contact for all your transportation and operational needs. Your business can eliminate inefficiencies and avoid wasteful logistical practices.
- Improved customer connectivity: While giving up control of your consumer management process can be daunting, hiring a 4PL provider can drastically improve customer satisfaction. 4PLs can increase engagement and answer queries from your target audience.
- Advanced technology: In contrast to 3PLs, 4PLs employ more advanced automation technology like robotics and integrated software.
Disadvantages of 4PL
Despite its bells and whistles, 4PL fulfillment isn’t always the solution. Here are a few cons to look out for:
- High dependency: Because 4PLs play a critical role in your daily operations, transitioning out of one can be extremely difficult. Think about a 4PL as your strategic partner before entering a long-term contract.
- Expensive: Compared to 3PLs, 4PLs may not be appropriate for small business budgets.
3PL vs 4PL: What’s Best for Your Company?
Whether a 3PL or 4PL is best for your company will depend on your business goals and current capacity. While 3PLs are eCommerce companies’ most common logistics model, there are also many reasons to choose a 4PL.
For instance, 4PLs can provide excellent logistical solutions for your supply chain if your business is on an enterprise level. On the other hand, newly expanding businesses can benefit from delegating their fulfillment responsibilities to 3PLs with logistical experience.
Key Takeaways
Both 3PLs and 4PLs provide significant advantages that can increase sales, improve your ROI and encourage business growth. However, your choice will depend on your business’s unique requirements. Before you make a decision, remember these key takeaways:
- There are five types of logistics services: 1PL, 2PL, 3PL, 4PL and 5PL. Each model introduces new intermediaries.
- 3PLs follow one of the most common logistics models, providing transportation services and some warehouse management. They are ideal for growing businesses that need to focus on other operational aspects, such as marketing and sales.
- 4PLs provide a more comprehensive solution for enterprise-level businesses that want to delegate fulfillment tasks. They are most appropriate for established companies that are ready to develop a franchise.
- The core difference between 3PLs and 4PLs is the level of logistic services they provide. While 3PL allows for direct communication between merchants and buyers, 4PL creates a second degree of separation that tends to make businesses more dependent on its services.
For a warehouse management solution you can always rely on, ShipHero has the answer for you. With over 99% shipping accuracy and 30% faster delivery speed, we can significantly reduce your warehousing costs and increase picking efficiency threefold.
Learn more about our warehouse management and outsourced fulfillment solutions today.
3PL vs 4PL FAQs
Is 4PL better than 3PL?
Whether 4PL is better than 3PL depends on your business needs. For enterprise-level businesses with more complex logistics processes, 4PL may be more appropriate.
What is an example of 4PL?
An example of 4PL is a logistics company that manages a merchant’s entire supply chain, from logistics to order fulfillment. While a 3PL will only be in charge of fulfillment and delivery, a 4PL will also handle communications between merchants and buyers. For instance, if a buyer is running out of a particular product, a 4PL will inform the merchant that they need to start producing a new batch.
What services does a 4PL offer?
While they differ from provider to provider, some services that a 4PL could offer include:
- Transportation
- Warehousing and storage
- Picking and packing
- Distribution and order fulfillment
- Last-mile and same-day delivery
- Optimized inventory placement
Apr 21, 2023 | Blog
Stock-keeping units (SKUs) are essential for retailers. They let you track inventory quantity and stock movements without having to do physical checks every day.
But what do SKUs really do, and how do you make them? Read on for a comprehensive guide on SKUs!
What Is a Stock Keeping Unit (SKU)?
A stock-keeping unit (SKU) is an alphanumeric code assigned to each of your products. They usually come in the form of scannable barcodes printed on labels. A SKU usually contains the product’s details like its price, variant, size and more.
Each product variant has a unique SKU. So, for example, you have purple and yellow T-shirts in three sizes each: small, medium and large. Each variant of these T-shirts has its own SKU, meaning you have six SKUs.
Why do you need unique SKUs for each variant? This is to prevent mix-ups during the picking process. If a SKU only registers the color, your picker might retrieve T-shirts of the wrong size.
Why Are SKUs Important?
SKUs are important for stock tracking and sales data collecting. Tracking the movement of SKUs alongside customer orders means you know what products are selling and which variants are most popular. This way, you can anticipate high demand by stocking up on popular items.
SKUs are also often used for product recommendations in online stores. Let’s say a customer puts an action movie DVD in their cart. Your system can search for similar SKUs and recommend them to other action movies. This might trigger an extra purchase and increase your profits.
Stock Keeping Units (SKU) vs Universal Product Codes (UPC)
SKUs and UPCs are used for similar things. They both track inventory and stock levels. But there’s one key difference.
SKUs are retailer-specific. Even if two companies sell identical items, the SKUs will be different. Meanwhile, UPCs are universal, as the name implies. The same product will have the same UPCs across all retailers.
SKUs are more flexible than UPCs because they can either be printed in text or as a barcode. Meanwhile, UPCs can only be printed as a barcode. This means humans can easily read SKUs, while UPCs need a barcode scanner.
How Do You Create SKU Numbers?
You can create SKU numbers by splitting an alphanumeric string into different parts and defining each of them. Let’s take a look at the steps to create a SKU number:
- Make a top-level identifier: The first two or three digits of a SKU are a general classification of the product. These categories can be anything. Some examples include the product’s type, brand, manufacturer and department.
- Define a unique identifier: The middle part of the SKU is usually for unique identifiers like the item’s size, material and color.
- Finish with a sequential number: The last bit of the SKU is usually a sequential number that shows when it arrived in your warehouse. This means you won’t have a hard time calculating stock. Sequential numbers also help you prioritize selling items that have been in the warehouse longer.
- Input the SKUs into your inventory management system or point-of-sale: Manually managing hundreds or thousands of SKUs is extremely hard. That’s why the next step is to input your SKU in a database provided by your point-of-sale (POS) or inventory management system.
- Print SKU barcodes: Your POS system will convert the SKU numbers into barcodes. Print them and attach them with labels to your products.
What does an SKU number look like? Here’s an example SKU for an item sold at a clothing retail store:
Here’s the code broken down:
- JK: Jacket
- S01: Style 01
- YL: Yellow
- S: Small
- 001: First product at the warehouse
As you can see, the SKU system defines everything about the item to its most minute details. By reading the code, a picker can tell it’s a small yellow Style 01 jacket. They can also tell this is the first jacket of that type in the warehouse. From this information, they can send out the right item when a customer orders it.
Top 5 Uses of SKUs for Business
Now that we’ve learned what SKUs are and how to make them, it’s time to learn their uses. There are five major uses of SKUs in businesses.
1. Analysis
SKUs can track which items are selling and which ones aren’t. This helps you anticipate customer demand by purchasing more or less of certain products.
You can use SKU tracking data to predict which items might be top sellers so you can order more and maximize revenue. Conversely, you can reduce orders on items that aren’t selling well to prevent overstocking. Keeping inventory levels manageable also lets you save money on storage space.
SKUs don’t just give you insight into inventory. You can glean some behavioral insights, like learning which items are often bought together. This way, you can consider selling them as a package to further drive sales.
2. Inventory Management
SKU barcodes make inventory management easier through real-time tracking. As products arrive and leave your warehouse, your staff will scan their barcodes. This lets you monitor the stock levels of each item you have, even if you have multiple fulfillment centers.
More advanced warehouse management systems will even alert you when items are low in stock. By setting reorder points, you can prevent your most popular products from running out of stock. This prevents customers from shopping from other stores if something isn’t available.
3. Customer Assistance
SKUs organize your products so your warehouse team can easily find them. This means they can pick and pack goods faster, decreasing customer wait time. Faster deliveries mean happier consumers. This is especially important if you promise two-day delivery for your products.
4. Advertising and Marketing
Some eCommerce retailers use SKUs when advertising their products. They use this to ensure customers view the items they’re selling.
SKUs also work as an anti-poaching measure. When you promote a product based on its SKU, competitors can’t easily see which products you’re promoting because SKUs aren’t usually public. This makes customer poaching with lower prices and discounts tougher.
5. Product Recommendations
SKUs categorize items to make product recommendations easier. Your eCommerce platform can upsell or cross-sell other products to your customers based on what items they have in the cart.
Product recommendations usually show up on the checkout page just before people get their credit cards out. It can also “save” a sale by recommending similar products when the product a customer wants is out of stock.
Key Takeaways
SKUs don’t just help your pickers retrieve the right items. You can use SKU information for a variety of purposes, like behavioral analytics, demand prediction and product recommendations.
However, managing hundreds of SKU codes isn’t easy. You might need inventory management software to reliably handle all of them.
SKU FAQs
Is a barcode a SKU?
A barcode isn’t a SKU by itself. A SKU can be converted into a barcode, but barcodes can contain a variety of information.
What makes a good SKU?
A good SKU needs to contain the key details of a product without being overly long. Some essential details to include are size, color, category and order it arrived in the warehouse.
How are SKUs used in eCommerce?
SKUs are used in eCommerce in many different ways. Some of the more popular uses include inventory management, product recommendations and analysis.
Aug 2, 2023 | Blog
Businesses are only as efficient as the warehouses that store their stock and the software applications that keep track of supply chain logistics operations. Once your eCommerce business gets big enough that you can no longer fit all of the inventory in your garage, you must outsource processes such as warehousing and shipping to a third-party logistics (3PL) company. Successful 3PL enterprises manage their warehouse operations with warehouse management systems (WMS). These tools enable them to keep track of relevant information and control order management.
What is WMS?
WMS stands for warehouse management system. A WMS is software that helps you improve organization, visibility, and efficiency in your warehouse. Through integrations and automation, WMS helps you manage orders, stock levels, and shipments. WMS software with an intuitive user interface can be the solution you need if your current system makes it too time-consuming for employees to scan items and enter data about the locations and inventory levels of certain products. You can choose the features you need for your warehouse, and the WMS platform can integrate easily with the software that you already use for accounting and other business solutions.
What is eCommerce?
eCommerce is a general term for businesses that sell products on the online market. Some eCommerce businesses operate on well-known platforms like Amazon, Shopify, or Etsy, while others simply sell products through their own websites. Most eCommerce ventures start out as small businesses that offer a very limited number of products. In these cases, all of the picking and fulfillment of orders takes place in the business owner’s home or rented office space. If your eCommerce business has more customers than you have square feet of space in your garage, though, you will need to outsource order fulfillment and other warehouse processes.
Importance of Warehouse Management Systems for eCommerce Stores
In an eCommerce business, most of the work is taking place far from your location, perhaps in another state; this is just how the eCommerce industry works. Through your eCommerce platform, you see the customers place orders. When you integrate your eCommerce platforms with WMS, you get to see what is going on at the warehouse. It gives you a bird’s eye view of supply chain management. Just by viewing the analytics reports and watching the barcode scanning update itself in real-time on your dashboard, you get insights into what is going on with the movement of your products. You can follow the order tracking from the distributors all the way to your customers all over the world.
Efficiency and Productivity
The warehouse manager can quickly see how much more efficiently the warehouse operates once the companies have implemented WMS. With only a little bit of training, warehouse employees can use the WMS for all the tasks they need it for. Not every employee needs to be proficient in every functionality of the whole software suite. WMS enables warehouse workers to improve their speed and accuracy. Therefore, it enables warehouses and the eCommerce companies they serve to save on costs.
Inventory Management
Inventory management software, through ShipHero, NetSuite, or another major company, is a great addition to fulfillment centers. You will start to notice the benefits immediately. The software will help your warehouse and all of your employees improve their performance. Because of the reporting capabilities of WMS, you can start charting the improvement of your warehousing operations as soon as you install the software.
Order Accuracy
WMS is effective at reducing human error in all aspects of the warehouse’s operations, from putaway to packing. Mistakes in any area of the warehouse can lead to inaccurate order fulfillment. WMS can enable a 3PL warehouse manager to submit accurate orders to vendors, thus preventing overstocking. Retailers who use business software such as Oracle to manage their online sales marketplaces can also ensure that their customers are receiving the things they ordered with every delivery.
Cost Savings
WMS helps you save on shipping costs. For example, with greater order processing accuracy, you don’t have to do multiple deliveries just to ensure that one customer gets the correct box of products that he or she ordered. The employees’ mobile devices update their to-do lists in real-time. This enables each employee to fulfill more orders in a single shift. The WMS can quickly rearrange the workflow as necessary and communicate it to the employees in an understandable way.
Customer Satisfaction
Customers are loyal to certain brands not just because of the quality of the products but also because of the approach that the company takes to customer service. eCommerce brands with helping customer support, fewer errors in delivery, fewer delays due to stockouts, and more convenient shipping options can attract repeat customers as effectively as those whose products have the most snob appeal or sync with the latest trends. Installation of WMS is the first step to improved customer relationship management (CRM).
Scalability
Even when technology was not nearly as advanced as it is today, it was more cost-effective for businesses to operate on a large scale. WMS solutions make it easier to scale your business, whether your goal is to let the 3PL central team deal with all of the inventory control and supply chain optimization or to expand your operations into Europe, Canada, or anywhere else in the world. WMS offers you transparency about sales orders, workflows, and other steps in the supply chain, no matter how many different warehouse locations store your products.
Best WMS For eCommerce
ShipHero is the best WMS for eCommerce, but some other popular WMS are Edge, ShipBob, WooCommerce, and Magento. ShipHero offers you solutions for many different business processes. It includes multi-warehouse allocation management, inventory/order management, integrations with NetSuite and other major eCommerce partners. ShipHero has an advantage over its competitors when it comes to answering clients’ questions, knowledge of shipping management, and interacting smoothly with all of the devices and barcode scanners in the facility.
Understanding Different Types of Warehouse Management Systems
Not all warehouse managers should choose the same software solutions. Instead, you should consider the various pricing plans and decide which version of the WMS modules will help your warehouse staff complete their daily tasks and will provide important inventory information to help you focus on your business development planning goals and decisions. You should focus on paying only for the services you need and on a user experience that will make labor management easier by not alienating workers.
Standalone WMS
Standalone WMS is best for users who operate relatively small warehouses. It is a good choice if you don’t need one software suite to do everything. For example, maybe you already use QuickBooks for accounting, billing, and payroll, but you need the WMS to check the status of stock levels and replenishment. The size of your business makes a lot of difference regarding whether a standalone WMS is the solution to your inventory tracking problems.
Integrated WMS
Integrated WMS is useful for 3PL providers that manage multiple parts of the supply chain and must constantly keep their eyes on performance metrics. It handles everything from yard management and cross-docking to barcodes, batch counting, cycle counting, shipment tracking, and printing labels. Integrated WMS is useful for any 3PL company that employs complex fulfillment methods and deals with large amounts of stocks. Wholesalers and distribution hub warehouses alike can benefit from integrated WMS and the large number of features it enables you to access.
Cloud-Based WMS
If hardware is the backbone of your warehouse, then perhaps you should switch to cloud-based WMS carriers. Computer hard drives are easy prey for hackers. If hackers can guess one password, then they can breach all the devices on your network, and steal data that is worth more than all the goods in your warehouse. WMS with cloud storage is much better from a cybersecurity perspective.
On-Site WMS
If you have a mortal fear of Internet glitches, or if you just like to keep all the most important details stored on devices that bear your company’s logo, you can opt for on-site WMS. It has the same functions as cloud-based WMS and allows you to keep track of all the details of manufacturing and purchasing, even if it is not the wave of the future like cloud-based WMS.
How to Choose The Best Warehouse Management Software for Your eCommerce Business
Choosing the most appropriate WMS for your eCommerce business requires some research. Reading reviews of WMS platforms and watching promotional videos can only get you so far.
Evaluate Your Current System
Do you use any business software now? How well does it meet your needs? Which tasks are time-consuming to perform with your current WMS? How much do you pay for your current WMS, and how much return on investment do you get for it?
Identify Your Needs
In order to know what you want from a WMS, you have to know who you are as an eCommerce company. Some WMS were designed for warehouses that serve B2B operations and materials resource planning (MRP), while others are places for small businesses to park their lovingly crafted merchandise so that it can quickly reach their small but enthusiastic customer base. Which warehouse processes are you hoping to outsource?
Set Your Budget
One of the biggest mistakes you can make when buying business software is to pay for more features than you need. Don’t buy an iPhone or an Android when all you really need is a flip phone. When you set your budget at the beginning of the search, you cannot get too overwhelmed by the vast number of options. You can automatically eliminate the ones that are beyond your budget and only choose among the options that you know you can afford.
Check for Scalability
If you are still sending each package through UPS or USPS, will your WMS handle the distribution through automated processes? When you identify the needs of your business, you should think not only about your current needs but also your company’s short-term and long-term goals and how your needs will change as you achieve those goals.
Consider Integration Capabilities
How well the WMS integrates with other software applications that your company already uses is an important factor in your choice of WMS. Without seamless integrations, you will have to deal with time-consuming transfers of data and migration of files to the new system. This could consume a lot of time and cause disruptions to the operations of your warehouse.
Prioritize Ease of Use
The smartest WMS that can accurately predict what will happen at every point in the supply chain is useless if you and the employees of your warehouse cannot use it easily. User-friendly functions and an intuitive user interface are among the most important criteria for choosing a WMS.
Research Vendor Reputation
You should not base your entire decision on what you hear through the grapevine, but reading reviews of the WMS can help you decide. Look for reviews from companies that are similar to yours and pay more attention to general trends in the comments than to glowing praise or harshly-worded criticism.
Technical Support
Even the most user-friendly software will sometimes do things you don’t expect it to do, especially when you first get started using it. Technical support may be the second most important criterion after user-friendliness.
Request a Demo or Trial
No matter how many reviews you read, it is hard to know how easily you will get used to the software unless you try it out. If a WMS offers a free demo or trial, this is a mark of good customer service.
Assess Return on Investment (ROI)
Don’t automatically go for the cheapest WMS. Instead, think about how it will help you save on costs and increase your profits.
Key Takeaways
WMS can help your eCommerce business operate more efficiently, save on costs, and scale its operations.
FAQs
These are some common questions that eCommerce business owners have about WMS software.
What are Warehouse Management Activities?
Warehouse management activities are the tasks your employees must do to play their role in supply chain logistics. Warehouse management activities include cycle counting, putaway, and replenishment of stock levels.
How Much Does Warehouse Management Software Cost?
Most warehouse management software is available on a monthly subscription basis. The price per month varies according to which WMS software package you buy.
What are some Free Warehouse Management Software Options?
Some very simple business software applications are included with Microsoft Office, but these are only suitable for the smallest businesses. If your eCommerce operation is big enough to need warehouse space, you need a WMS subscription.
Contact ShipHero today for a demo.
Mar 28, 2023 | Blog
Warehouse management is a critical aspect of modern businesses, playing a pivotal role in efficiently handling goods, optimizing storage space, and streamlining fulfillment processes. To achieve these objectives, organizations need to follow specific processes, implement advanced technologies, and understand various aspects related to warehousing.
In this article, we will explore the purpose of warehouse management, the needs it addresses, essential workflows and tasks, and how it differs from other related aspects such as enterprise resource planning (ERP) and customer relationship management (CRM). We will also discuss the changes in the industry, the people involved, and the activities that take place in a full warehouse operation.
Purpose of Warehouse Management
The purpose of warehouse and supply chain management revolves around maximizing efficiency and productivity while minimizing waste and errors. It aims to ensure that goods are stored, picked, and shipped in a manner that meets customer demands and optimizes costs. By organizing and controlling warehouse operations, businesses can enhance their overall supply chain performance.
Needs Addressed by Warehouse Management
Warehouse management addresses several crucial needs, including:
Storage Space Optimization: Efficient warehouse management ensures the proper utilization of available storage space, and operating costs and allows businesses to stock the right inventory in the right quantities.
Fulfillment Process Streamlining: By implementing effective warehouse management strategies, businesses can streamline their fulfillment process, reducing order processing times and improving customer satisfaction.
Minimizing Human Errors: Automated warehouse systems and standardized processes help minimize human errors during inventory management and order fulfillment.
Inventory Accuracy: Warehouse management systems (WMS) ensure real-time tracking of inventory levels, leading to better inventory management deals, more accuracy and reduced stockouts.
Cost Optimization: By optimizing storage, using inventory turnover minimizing errors, and improving processes, warehouse management helps in overall cost optimization.
Challenges Warehouse Management Solves
Without resource planning, your warehouse can quickly devolve into chaos. If you do not implement efficient processes and utilize modern technologies your warehouse might become slower than your competition, you could have low visibility, and you could receive complaints from angry customers who don’t know where their order is. But with warehouse management, you gain a deep understanding of what is needed for both your consumers and your retailers which you might not have had insight on before. Warehouse management solves a variety of challenges for businesses, including inventory management, order fulfillment, space utilization, labor management, and technology implementation. As an example, before you might not have known your stock levels, with a good warehouse management system you now know exactly what you have and what you need.
Principles of Warehouse Management
Warehouse management is guided by several key factors. However, you can sum them up in the six following principles.
- Space optimization: Effective warehouse management involves the customization and optimization of space to minimize the amount of capacity required to store inventory, and maximize the number of products which can be stored.
- Inventory accuracy: Maintaining accurate inventory records involves tracking inventory levels in real-time, utilizing advanced technologies to ensure accuracy, and conducting regular inventory audits.
- Efficient order fulfillment: Timely and accurate order fulfillment requires efficient order picking and packing processes, as well as effective inventory management to ensure that the products are available to fulfill orders.
- Labor optimization: Managing labor resources involves optimizing staffing levels, providing adequate training, and utilizing advanced technologies to improve labor efficiency.
- Advanced technology: Utilizing advanced technologies such as barcoding, RFID, and warehouse management software solutions can help businesses improve warehouse management processes, optimize space utilization, and enhance overall efficiency.
- Continuous improvement: Warehouse management requires a culture of continuous improvement, with ongoing monitoring and analysis of processes, and implementation of new strategies to optimize warehouse operations.
Inventory Management Techniques
When it comes to managing inventory in a warehouse, inventory management is of utmost importance. Different techniques are designed to keep the process streamlined and prevent potential roadblocks.
- Just-in-Time (JIT): This approach aims to reduce the costs associated with inventory holding. It involves ordering and receiving inventory as and when required in the production process. This means lower storage costs and a decreased risk of inventory obsolescence.
- First-In-First-Out (FIFO): FIFO is a method where the oldest inventory items are sold first. It’s particularly crucial for perishable goods to prevent spoilage.
- Last-In-First-Out (LIFO): Unlike FIFO, LIFO involves selling the most recent inventory first. It’s beneficial when dealing with non-perishable goods.
- ABC Analysis: This technique involves categorizing inventory based on its importance. Category ‘A’ items are the most valuable, ‘B’ items are of moderate value, and ‘C’ items are the least valuable. The aim is to provide more focus and control over higher-value items.
What Is a Warehouse Management System?
A warehouse management solution (WMS) is a software application which manages and optimizes warehouse operations, including inventory control, order fulfillment, space utilization, and labor management. These systems, sometimes known as inventory management software or warehouse management system WMS software, is typically a cloud based software solution. These solutions utilize advanced technologies such as barcoding, RFID, and voice recognition to automate and streamline warehouse processes as well as improve warehouse space and warehouse design. Companies like ShipHero have developed this software to help businesses optimize their warehouse operations, improve efficiency, and reduce costs.
Warehouse Performance Metrics
Key Performance Indicators (KPIs) provide quantifiable measurements to gauge warehouse efficiency:
- Order Picking Accuracy: It measures the accuracy of order picking operations. A high order picking accuracy rate means fewer errors and returns.
- Order Cycle Time: This is the total time taken from when an order is received to when it’s shipped. A lower order cycle time indicates faster order fulfillment.
- Stock Turn: Stock turn refers to the number of times inventory is sold and replaced in a specific period. A higher stock turn rate means inventory is moving quickly, which is good for cash flow.
Workflows and Tasks in Warehouse Management
The warehouse management process involves various things, workflows and tasks, such as:
- Receiving: This involves inspecting incoming shipments, checking for damages, and updating inventory records accordingly.
- Put-away: After receiving goods, they are assigned specific bins or locations within the warehouse for proper storage.
- Picking: When orders are placed, warehouse staff retrieves items from their designated locations for shipment.
- Packing: Items are appropriately packed to ensure safe and secure transportation.
- Shipping: The shipping process involves preparing packages for delivery, generating shipping labels, and coordinating shipments.
- Cycle Counting: Regular counting of a subset of inventory to maintain inventory accuracy.
- Kitting and Assembly: Preparing kits or assembling products according to customer requirements.
- Material Handling Equipment (MHE) Operation: Proper handling of MHE such as forklifts and conveyors for efficient movement of goods.
Warehousing Aspects and their Differences
Warehouse management differs from other aspects, notably:
- Enterprise Resource Planning (ERP): While ERP focuses on integrating various business processes, including accounting, sales, and manufacturing, warehouse management specializes in optimizing warehousing operations.
- Customer Relationship Management (CRM): CRM is geared towards managing customer interactions, whereas warehouse management focuses on the effective handling of goods and inventory.
Changes in Warehouse Management
Advancements in technology, such as machine learning models and internet interfaces, have revolutionized warehouse management. Automated systems, real-time updates, and barcode scanning have accelerated processes and reduced manual errors.
People and Activities in Warehousing
Warehouse management involves various personnel, including the warehouse workers, staff, supervisors, and managers. Their activities range from receiving and inventory management to order picking and shipping coordination.
Warehousing in Different Industries and Regions
Warehouse management practices may vary across industries and regions due to differing needs, price points, and regulations. However, the fundamental principles of efficiency and accuracy remain consistent.
Challenges and Opportunities
Warehouse management faces challenges related to changing customer demands, environmental factors, and industry-specific rules and regulations. However, these challenges also present opportunities for innovation and improvement.
Warehouse Layout and Design
A well-designed, warehouse floor layout contributes to efficient workflows, reducing unnecessary movement and optimizing space utilization. Proper organization and arrangement of pallets, packages, and bins play a crucial role in achieving this.
Choosing the Right WMS Solution
Selecting an appropriate, WMS system solution is essential for efficient warehouse management. Consider factors like scalability, interface flexibility, and integration with other applications like ERP and CRM.
Standards and Deliveries
Adhering to industry standards in warehouse management ensures consistency and efficiency. Timely and accurate deliveries are crucial for customer satisfaction and retention.
Approach to Purchases and Collaboration
An organized approach to purchases and collaboration with suppliers help maintain optimal inventory levels and streamline procurement processes.
Interaction Among Warehouse Departments
Effective communication and collaboration among various warehouse departments enhance overall productivity and accuracy in operations.
References and Direction for Continuous Improvement
Using data-driven references and insights guide warehouse management decisions can improve customer satisfaction and facilitate continuous improvement.
User-Friendly Interfaces and Their Impact
Warehouse management systems with user-friendly interfaces enable smoother adoption and greater efficiency among warehouse personnel.
Combination of Hardware and Software Solutions
A successful warehouse management approach combines advanced hardware and software solutions to achieve seamless integration and automation.
Pressure on Accuracy and Timelines
In the competitive market, there is a constant pressure on warehouses to maintain accuracy and timeliness in the order fulfillment process.
Basics of Warehouse Safety
Implementing basic safety measures ensures a secure working environment for warehouse staff and reduces the risk of accidents.
Invoices and Financial Transactions
Integrating invoice management into warehouse systems streamlines financial transactions and aids in accounting processes.
Path Optimization for Efficient Movement
Analyzing and optimizing paths within the warehouse reduces travel time and improves overall efficiency.
Condition of Warehouse Facilities
Maintaining the condition of warehouse facilities is essential to ensure smooth operations and reduce downtime.
Same-Day Deliveries and Customer Expectations
Customer expectations for same-day deliveries have increased, challenging warehouse management to meet these demands efficiently.
Brick and Mortar vs. E-Commerce Warehousing
Warehousing strategies differ between traditional brick-and-mortar stores and e-commerce fulfillment centers due to varying order volumes and customer expectations.
Combining WMS Systems for Multichannel Fulfillment
Integrating multiple WMS systems enables efficient multichannel fulfillment, catering to various customer preferences and sales channels.
Users’ Roles and Training
Understanding users’ roles and providing proper training ensures effective utilization of warehouse management systems and tools.
The Importance of Making the Right Choice
Selecting the right warehouse management solution is a critical decision that significantly impacts warehouse, operational efficiency and overall business success.
Barcode Technology for Inventory Management
The use of barcodes in warehouse management facilitates accurate and efficient, inventory storage and tracking, reducing errors and enhancing overall productivity.
Facility Layout and Design for Optimal Efficiency
The layout and design of the warehouse facility play a crucial role in achieving optimal workflow and maximizing space utilization.
Collaboration Among Warehouses to Support Each Other
Collaboration among warehouses within a network can help support each other during peak periods and ensure timely order fulfillment.
Addressing Problems and Proactively Identifying Solutions
Warehouse management involves identifying and addressing problems promptly while proactively seeking solutions to optimize operations.
Managing Warehouse Users and Their Roles
Properly managing warehouse users and assigning appropriate roles ensures smooth coordination and efficient execution of tasks.
The Role of Modules in Warehouse Management
Warehouse management systems consist of various modules, each serving a specific function, such as inventory management and order processing.
Module Integration for Seamless Operations
Integrating different warehouse management modules allows for smoother transportation management and more efficient warehouse operations.
Impact of Seasonality on Warehouse Management
Warehouse operations are often affected by seasonal customer demand fluctuations. During peak periods, such as holidays or sale seasons, warehouses face challenges like increased order volumes, space constraints, and staffing needs. Strategies to manage these challenges include:
- Demand Forecasting: Utilizing past sales data to predict future demand can help in planning for peak seasons.
- Flexible Staffing: Temporary hires or flexible shift planning can meet the increased labor demands.
- Optimized Storage: Adjusting storage plans to accommodate increased inventory can help optimize space usage.
Future Trends in Warehouse Management
Emerging trends that are shaping the future of warehouse management include:
- Robotics: Robots can perform various tasks, from picking and packing to transporting goods, boosting productivity and reducing human error.
- Blockchain: This technology ensures traceability and transparency in inventory tracking, enhancing the accuracy and reliability of data.
- Predictive Analytics: By analyzing historical data, predictive analytics can provide forecasts about future demand, helping warehouses prepare in advance for different scenarios.
By staying ahead of these trends, warehouse managers can ensure they’re prepared for the future and can maximize their efficiency and productivity.
Conclusion
Warehouse management is an integral part of modern business operations. By understanding the purpose, needs, workflows, and tasks involved, organizations can optimize their warehousing, streamline warehouse operations, improve fulfillment processes, and provide excellent customer service. Embracing technological advancements and empowering skilled personnel will help organizations thrive in this dynamic and ever-changing environment.
Apr 2, 2024 | Blog, eCommerce, Warehouse Management Software
For an eCommerce business, managing inventory can sometimes feel like a never-ending puzzle. As products fly off the digital shelves and new ones are added constantly, keeping track of stock levels, shipments, and order fulfillment can become overwhelming. That’s where eCommerce inventory management software is helpful.
In this article, we’ll explore the best options available to streamline your inventory management processes and help your eCommerce business thrive.
Top eCommerce Inventory Management Software
The best eCommerce inventory management software options available include:
- Software A: Known for its user-friendly interface and robust inventory tracking features.
- Software B: Offers seamless integrations with popular eCommerce platforms and marketplaces for effortless inventory management.
- Software C: Excels in multi-channel inventory synchronization, allowing businesses to effortlessly manage inventory across different sales channels.
- Software D: Provides advanced reporting and analytics tools to gain valuable insights into sales trends and inventory performance.
Each software option caters to different business needs, so it’s essential to evaluate your specific requirements before making a decision — and your evaluation process will be more successful the more you understand about eCommerce inventory management software. Keep reading to get informed.
What is eCommerce Inventory Management Software?
eCommerce inventory management software is a digital tool designed to assist online retailers in efficiently managing and tracking their inventory. These software solutions provide a centralized platform where business owners can monitor stock levels, suppliers, purchase orders, and sales data. By automating essential inventory tasks, eCommerce inventory management software gives businesses real-time help preventing stockouts and overstocks.
Automating your order management process is another way to streamline your operations further. Discover how e-commerce order management software can complement your inventory management system, ensuring seamless integration and enhanced efficiency across your sales channels.
Efficient inventory management is crucial for the success of any eCommerce business. Without it, businesses could find themselves with dissatisfied customers, lost sales, and increased costs.
eCommerce inventory management software offers comprehensive prevention measures. It allows businesses to streamline their inventory management processes so they always have the right products in stock, at the right time, and in the right quantities. With real-time insights into stock levels and sales data, business owners can make informed decisions about purchasing, pricing, and promotions.
A key feature of eCommerce inventory management software is its ability to automate various inventory-related tasks. For example, it can automatically update stock levels as orders are processed, generate purchase orders when inventory reaches a certain threshold, and sync inventory data across multiple sales channels. This automation saves time and reduces the risk of human error.
Moreover, eCommerce inventory management software provides businesses with a centralized platform where they can manage their suppliers and track their performance. This lets businesses maintain strong relationships with their suppliers, with timely deliveries and competitive pricing. Also, with a clear overview of supplier performance in their back pockets, businesses can have more information going into new contract negotiations.
Another advantage of eCommerce inventory management software is its ability to integrate with other business systems like accounting software and customer relationship management (CRM) tools. This integration gives businesses a holistic view of their operations, from inventory management to financials and customer interactions. By having all this information in one place, businesses can gain deeper insights into their overall performance and identify areas for improvement.
Furthermore, eCommerce inventory management software often comes with advanced reporting and analytics capabilities to generate customized reports, track key performance indicators (KPIs), and identify trends and patterns in their inventory data. By analyzing this data, businesses can find cost savings and improve efficiencies at all levels of the business.
In conclusion, eCommerce inventory management software is a powerful tool that helps online retailers efficiently manage and track their inventory. With its automation capabilities, real-time insights, and integration with other business systems, it helps businesses improve their bottom lines.
To dive deeper into the world of inventory management and explore the top contenders, check out our detailed overview of the best inventory management software. This guide offers insights into each option’s unique strengths, helping you understand which software might be the perfect fit for your business needs.
Benefits of eCommerce Inventory Management Software
Implementing eCommerce inventory management software brings several benefits to your business.
- It optimizes inventory levels, which reduces costs associated with excess stock or missed sales due to stockouts.
- It improves order accuracy and fulfillment speed, leading to happier customers.
- It strengthens relationships with vendors by ensuring timely deliveries.
- It aids in forecasting, making purchasing decisions, and analyzing sales trends.
For businesses that operate within a third-party logistics framework, understanding how a WMS integrates into this model is crucial. Learn more about the specifics of a 3PL warehouse management system and how it can revolutionize your logistics operations.
Common Challenges of eCommerce Inventory Management
Before delving into the best eCommerce inventory management software options, let’s examine some of the common challenges online retailers face in this area.
A frequent obstacle is inaccurate or outdated stock information, which can lead to frustrating customer experiences and lost sales.
Other challenges include managing multiple sales channels, maintaining consistent stock levels across different platforms, and effectively handling returns and exchanges. These difficulties highlight the importance of an integrated inventory management system.
Key Features of eCommerce Inventory Management Software
Each eCommerce inventory management software comes with a unique set of features to address the specific needs of online retailers. Some key features to consider when choosing the best software for your business include:
- Real-time inventory tracking and stock level alerts
- Automated purchase orders and supplier management
- Integration with popular eCommerce platforms and marketplaces
- Multi-channel inventory synchronization
- Barcode scanning and label printing capabilities
- Advanced reporting and analytics tools
- Forecasting and demand planning functionalities
How to Choose the Best eCommerce Inventory Management Software Solution
Selecting the right eCommerce inventory management software solution for your business requires careful consideration. Follow these steps to guide your decision making:
- Evaluate your business needs: Assess your inventory management pain points and identify the features and functionalities you require.
- Research the options: Explore the top eCommerce inventory management software solutions available in the market and compare their features.
- Read reviews and testimonials: Gain insights from other businesses that have implemented the software. Pay attention to their experiences and whether the software meets their needs.
- Request demos and trials: Take advantage of free trials or demos to test drive the software and assess its usability.
- Consider scalability: Ensure the software can accommodate your business growth and handle increased sales volumes.
By following these steps, you’ll be well-equipped to make an educated decision and select the best eCommerce inventory management software for your business.
eCommerce Inventory Management Software Costs
The cost of eCommerce inventory management software can vary depending on its features and functionality, as well as the size and needs of your business. Some software providers charge a monthly subscription fee, while others offer tiered pricing based on the number of orders or users.
It’s important to consider the software’s return on investment and how it aligns with your budget. Remember, investing in the right software can lead to significant cost savings and improved efficiency in the long run.
Key Takeaways
Efficient inventory management is a crucial component of a successful eCommerce business. Implementing eCommerce inventory management software can help streamline your operations, prevent stockouts, and optimize your inventory levels. By carefully considering your business needs and exploring the top software options available, you can select the best solution to propel your eCommerce business forward.
Frequently Asked Questions
Can eCommerce inventory management software integrate with multiple sales channels?
Yes, many eCommerce inventory management software solutions offer multi-channel synchronization to manage inventory across various platforms seamlessly.
How does eCommerce inventory management software help prevent stockouts?
eCommerce inventory management software provides real-time tracking of inventory levels and sends alerts when stock levels are low.
Can eCommerce inventory management software generate detailed reports?
Absolutely! Many software options come with robust reporting and analytics tools, enabling businesses to gain valuable insights into sales trends, stock performance, and more.
Is eCommerce inventory management software suitable for small businesses?
Yes, eCommerce inventory management software caters to businesses of all sizes. Many providers offer different pricing plans to accommodate the needs and budgets of small businesses.
With the right eCommerce inventory management software by your side, you can wave goodbye to inventory management headaches and focus on growing your business and satisfying your customers.
Dec 9, 2022 | Blog
In the world of supply chain management, understanding the different types of warehouses is crucial. These storage areas, ranging from stockrooms to depots to consolidated warehouses, each serve a unique purpose, facilitating order fulfillment and ensuring customer satisfaction. They are integral to the warehouse design and management systems of any company.
Private Warehouses
Private warehouses are owned and operated by suppliers and manufacturers, or distributors. These private warehousing storage systems provide an advantage of control over the handling and storage of materials. Companies like Target have their own private warehouse or warehouses, offering flexibility to adapt to changes and control transportation costs. The name of the warehouse owned or company is usually associated with the warehouse for easy identification and maintenance.
Public Warehouses
Public warehouses are rented spaces, offering storage to different businesses on a contractual basis. For startups and smaller companies, this eliminates the need for a large investment in a private building. An added benefit of public warehouses is their potential for warehouse automation, improving efficiency and reducing human error. These warehouses can be found in almost every country.
Bonded Warehouses
Bonded warehouses are government-licensed storage areas for imported and duty-unpaid goods. This type of warehouse enables manufacturers to defer payment of taxes until goods are sold or shipped, aiding in maintaining cash flow. They also provide a secure environment for storing valuable items such as pharmaceuticals in secured boxes.
Cooperative Warehouses
Cooperative warehouses are owned and operated by organizations of farmers or similar groups to store and distribute members’ produce. They can reduce transportation and packaging costs while maintaining a high level of customer service. These public warehouses tend to perform specific functions that cater to the needs of the cooperative members.
Cons of Public Warehouses
Less control and insight on stock levels, products flow and product handling since the goods are under the control of the client.
Distribution Centers
Distribution centers are key for fast-paced order and fulfillment services. A prime example of this type of warehouse function is cross-docking, where incoming shipments are directly transferred to outgoing areas, minimizing storage time and cost. In some cases, these fulfillment centers also serve as a stash point for goods before they are distributed to different locations.
There is also room to store temporary goods. Unlike other warehouses the warehouses can store material for temporary and long periods, with significantly higher rates for goods incoming and outgoing. If a large amount of material is collected and distributed to multiple distributors in your supply chain it can help greatly. Distribution centres manage and ship orders as well and are essential in the communication of suppliers and clients.
Automated Warehouses
Automated warehouses use state-of-the-art warehouse automation technology to streamline processes. These smart warehouses can handle large quantities of products and improve accuracy in order fulfillment. It’s an optimal solution for companies aiming for growth and efficiency. The warehouse layout in these facilities is designed to maximize automation.
Cold storage warehouse
It is a storage area where temperature-sensitive materials like medications, cosmetics and drinks are stored. These warehouses are specially constructed to maintain the lowest possible temperatures. This storage facility is mainly beneficial because it will keep the quality for years. A further cooling system provides the temperature within the cold storage facility.
A Look at Specific Warehouse Types
To dive deeper, let’s take a look at some concrete examples of how different warehouses have different use cases. The U.S. government maintains government warehouses for storing reserves of essential items, from emergency medical supplies to military equipment. This government warehouse serves as an example of how even private sector companies and warehouses can cater to very specific needs.
Amazon’s modern warehouses are another fantastic illustration of warehouse automation. These tech-powered facilities maintain a vast range of products, managing inventories with advanced robotics. They’re designed to store inventory and ensure quick, accurate deliveries of imported goods to customers, showcasing the efficiency and scalability automated warehouses can provide. Their proprietary warehouses have set the benchmark of digital transformation in the warehousing operations industry and are optimal for long term storage.
Costco operates a network of cooperative warehouses. It sources products directly from producers and sells them to consumers in bulk via a typical cooperative warehouse, reducing transportation and packaging costs. These warehouses cater to members, reflecting the utility of cooperative warehouses for certain business models.
However, there are also cons to fulfillment centers. Costs can add up quickly, particularly if making extensive use of their value-added services. You also have little control over how your items are handled and shipped, which can risk product damage and unhappy customers best suited to storage items on a short-term basis, such as those with high-value In other words, rather than operating in an open-plan first-come, first-serve basis, contract warehouses provide storage when it is advisable.
A Closer Look at Warehouse Costs
Costs associated with warehouse operations can be a deciding factor in which type of public warehouse is right for your business. A private warehouse may require a higher upfront investment for construction or purchase, but ongoing costs are within your control. Public warehouses eliminate that initial expenditure but have recurring rental fees. Bonded warehouses provide tax advantages, while automated warehouses may save businesses money entail substantial technology and maintenance costs. Evaluating these costs in relation to your business’s financial capacity and long-term goals is crucial.
Choosing the Right Warehouse for Your Business
Choosing the right warehouse will depend on several factors, including:
- The amount and type of goods: Does your business handle large volumes of small items or smaller volumes of large items?
- The stage of the production process: Are you storing raw materials, work-in-progress, or finished goods?
- The desired level of control over storage and transportation: Do you need close control over inventory and transportation, or is flexibility more important?
Ask yourself these reflective questions to help in your decision-making process:
- What are my specific storage needs, and how can different warehouse types meet these needs?
- How might my warehouse needs change as my business grows or as market demands shift?
- What kind of investments am I willing to make in warehouse infrastructure, either up-front or over time?
- Do I want to invest in automations and latest technologies and build a smart warehouse?
Remember, the correct warehouse inventory and storage facility choice can enhance your supply chain management.
Case Studies on Warehouse Selection
Looking at real-world examples can further clarify the impact of warehouse space and type on a business’s success:
- Walmart: The retail giant operates an extensive network of distribution centers, efficiently handling vast quantities of goods. This system, combined with cross-docking, allows Walmart to maintain low storage costs and rapid product turnover, a cornerstone of its low-price strategy.
- DHL: This global logistics company uses bonded warehouses at key locations, allowing clients to delay duty payments and aiding in smooth international trade. Their choice of warehouse supports their role as a global shipping and logistics leader. Since it’s a major part of their business operations, most of their properties have undergone digital transformation and have been transformed into smart warehouses.
- Zara: The fashion brand’s innovative use of an automated distribution center in Spain has become a case study in supply chain efficiency. Their system responds rapidly to changing fashion trends, which is integral to their business model.
- IKEA: IKEA, the multinational furniture retailer, has perfected its warehouse management to align with its unique business model. IKEA’s warehouse-style stores allow customers to pick up flat-packed furniture directly from the warehouse section. This clever blending of retail and warehouse spaces allows IKEA to reduce its storage costs and simplify inventory management. Further, by placing the responsibility of product assembly on the customer, IKEA has significantly reduced its storage and transportation costs. IKEA’s strategic choice of a warehouse type closely integrated with their retail outlets is integral to their success and unique customer experience. They even have their own bin storage practices.
Future Trends in Warehousing
The warehousing industry doesn’t stand still. In a decade, every warehouse will be a smart warehouse and make the best use of the following emerging trends:
- Artificial Intelligence (AI): AI can improve accuracy in demand forecasting, optimizing stock levels and reducing warehousing needs. It can also aid in warehouse management, improving efficiency.
- Drones: Drones in warehouses can be used for inventory management, reducing manual labor, and increasing accuracy. They can also work in unsafe conditions, improving worker safety.
- Internet of Things (IoT): IoT devices collect and analyze data in real time, improving operational efficiency. They can track goods, monitor equipment performance, and even predict maintenance needs, reducing downtime.
Embracing these trends can give your business a competitive edge, allowing you to maximize efficiency and adapt to future business needs and challenges in the warehousing industry.
Concluding Thoughts
The warehouse is more than just a storage space. It’s an essential cog in the supply chain management system. Understanding the different types of warehouses and their pros can provide your business with an edge, enhancing order fulfillment and bolstering customer satisfaction. From private hoards to other warehouse options, automated caches to on demand warehouses, the answer to your storage needs lies in understanding these warehouse types.
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Oct 17, 2022 | Blog
Understanding the contrasts between push and pull supply chain strategies is key to effective operations, especially in a world of fluctuating customer demands. As the scale of these demands grows, the question arises: which strategy is most effective for my operation?
This article discusses the importance of these strategies, their impact, and real-life examples.
What is a Push System?
A push system anticipates supply chain operation plans, inventory levels and activities in advance, based on forecasts and projections. It represents the initial point of the supply chain cycle, focusing on the warehousing and transportation of goods. A push system helps you anticipate future demand and manage inventory accordingly.
The push strategy focuses on predictions. It uses forecasts to plan inventory levels, procurement, and the distribution centers’ activities. While this supply chain strategy still requires a level of predictability, it is robust against demand uncertainty and maximizes capacity utilization in the best warehouse fulfillment centers. This strategy is an innovation in the supply chain and production process that helps in solving the problem of demand uncertainty. However, its effectiveness depends on the accuracy of methods of how to forecast demand and the data used.
What is a Pull System?
A pull strategy, on the other hand, responds directly to customer demand, ensuring flexibility and efficiency. Both strategies aim to deliver the right products at the right times. Read more about push and pull strategies here.
In contrast, the pull strategy is customer-first. It bases operations on actual customer demand rather than predictions, offering flexibility in response to changes in immediate consumer demand and patterns. This strategy plays a key card in meeting immediate customer needs, hence enhancing customer experience. It provides solutions to the problem of sudden changes in demand.
Pull Supply Chain Strategies
Pull strategies are a form of stock management in just-in-time. They aim at minimizing stock and focusing on last-minute supply. Under this strategy, the product is pushed into the supply chain whenever customer demands justify it. Those companies that operate under this strategy are examples of companies that wait until they have received an order to build their own computers and sell the product. A pull strategy can help businesses minimize costs by carrying as much inventory that can’t be sold. If a company doesn’t increase production in definite quantities, it risks losing the supply and demand for fewer products.
Real-World Example: How Walmart’s Supply Chain uses a hybrid push-pull system
Walmart provides an excellent example of the use cases of both push and pull warehousing strategies at scale. Their utilization of a hybrid push-pull strategy with data insights for inventory management and demand response illustrates the importance of these strategies in different steps for enhancing customer satisfaction, reducing waste, and increasing revenue. This is a use case that shows how these strategies matter in real-world situations.
Impact of Push and Pull Strategies on the Bullwhip Effect and Consumer Demand
The bullwhip effect describes the magnified fluctuations in orders that often occur in most businesses as customer demand ripples through the supply chain. Effective use of push and pull strategies can help mitigate this effect, creating a more balanced and responsive supply chain. This is where the goal of these strategies comes into play.
Impact of Technology on Both Push vs Pull Systems in Supply Chain Strategy
Technology is an instrumental tool for both push-and-pull supply chain strategies. Under a push supply chain strategy, technologies like AI and machine learning can improve the accuracy of forecasting, helping businesses better anticipate customer demand and plan their inventory accordingly.
On the other hand, in a pull strategy, technologies like IoT can enhance real-time visibility into customer demand, triggering the production or delivery of goods exactly when needed. Also, technologies like blockchain can provide a secure and transparent way of tracking goods in both pull systems and strategies, thereby reducing risks and improving trust.
How do Inventory Management Strategies Change Between a Push and Pull System?
In terms of inventory management and manufacturing processes, a push strategy often relies on maintaining safety stocks to buffer against forecast inaccuracies and sudden demand changes. Techniques like the Economic Order Quantity (EOQ) model can be used to balance order size and frequency, minimizing overall inventory costs. Conversely, a pull production strategy typically employs methods like Just-in-Time (JIT) inventory, where goods are produced or ordered to meet actual demand. This approach minimizes stockholding costs but requires accurate demand sensing and quick response capabilities.
Risk Management in Supply Chain
Risk management in a supply chain varies between push strategies and pull strategies. A push strategy can guard against supply disruptions by maintaining a safe stock, but there is a risk of overproduction if demand forecasts are inaccurate. On the other hand, a pull production strategy, relying on actual demand, can minimize overproduction and stockholding costs. However, it requires a more robust system to prevent stockouts during sudden demand surges or supply interruptions.
Choosing Between Push and Pull Strategies
Choosing between a push and pull strategy for your own supply chain management strategy involves considering several factors, each with its unique impact on your supply chain efficiency and operation:
- Business Model and Product Nature:
The nature of your products and your business model plays a significant role. Are your products long-lasting, or do they have short lifecycles? Is your market stable, or does it fluctuate frequently?
- Demand Predictability
If your business experiences predictable demand patterns, a push strategy could be effective. It allows for accurate forecasting, efficient inventory planning, production scheduling, and engaging with distributors. However, the risk here is overproduction if demand is overestimated or changes unexpectedly.
- Market Volatility
On the contrary, if your market is highly volatile, a pull strategy might be better. This strategy is flexible and customer-centric, enabling you to respond swiftly to demand changes. By focusing on customer demand sensing, real-time communication, just-in-time inventory, and strong supplier engagement, waste can be significantly reduced, and customer satisfaction can be improved.
- Real-Time Data Management
The pull strategy’s effectiveness largely depends on your ability to manage real-time data and ensure supplier flexibility. Thus, your infrastructure capability to handle real-time data should be a key consideration.
In summary, the choice between push and pull-based supply chain management strategies should be made after carefully analyzing your capacity for demand forecasting, understanding the volatility of your supply chain partners and market, considering your product lifecycle, and assessing your capability to manage real-time data. Such comprehensive analysis can guide you in implementing the most effective strategy for your supply chain.
Implementing a Push Strategy in Your Supply Chain
Implementing a push strategy in your supply chain inventory system can be an effective way to control your inventory and manage demand. Here are some steps to a push system to follow:
Accurate Demand Forecasting
Use historical data, market trends, and predictive analytics tools to generate accurate demand forecasts. Understand the patterns, peak times, and seasonality in your business.
Inventory Planning
Based on both production and demand forecasts, plan your inventory. This includes determining safety stock levels to buffer against unexpected changes in demand or supply.
Production Scheduling
Schedule production to match the forecasted demand. This ensures that sufficient goods and raw materials are produced in advance to meet customer needs.
Distributor/ Retailer Engagement
Engage with distributors or retailers to ensure that products are delivered at the retail store at the right time. This requires effective communication and coordination.
Monitoring and Adjusting
Regularly review the forecast accuracy and make necessary adjustments. This ensures your push strategy remains effective even as market conditions change.
A push strategy requires a robust infrastructure for data collection, storage space analysis, and communication with production processes. Also, it requires a certain level of predictability in future demand itself. If implemented effectively, a push strategy can help you maximize your supply chain’s efficiency and utilization.
Implementing a Pull Strategy in Your Supply Chain
A full pull system and strategy is driven by actual customer demand, allowing for a more flexible and responsive supply chain. Here’s how to make pull systems and implement it:
Customer Demand Sensing
Implement real-time data collection systems to sense and meet customer demand more accurately. This data integration ability could involve point-of-sale data, online traffic analytics, or customer feedback.
Real-time Communication
Set up real-time communication with suppliers and manufacturers. When a sale is made, the information is instantly relayed, triggering a replenishment order.
Just-in-Time Inventory
Adopt a Just-in-Time (JIT) inventory approach. Produce or order goods as needed based on actual or anticipated demand, reducing costs and minimizing inventory costs.
Supplier Engagement
Establish strong relationships with suppliers. The pull strategy requires suppliers to be flexible and responsive to changes in demand.
Continuous Monitoring and Adjusting
Keep track of key performance indicators such as lead times, order fulfillment rates, and stockout rates. Use this data to continuously optimize your pull strategy.
While a pull strategy requires a significant level of coordination and real-time data visibility, it can reduce waste, minimize stockouts, and improve customer satisfaction. Implementing a pull strategy is particularly effective in highly volatile markets or for products with short lifecycles.
Concluding Thoughts
In a rapidly changing world, it is essential for retailers to adapt their supply chain strategy strategies to stay ahead in their operations. With careful planning and capacity utilization, supply chains can effectively meet customer demands. The result is a more efficient and responsive supply chain that benefits economies at large. After all, in the world of supply chain management, retailers hold the cards and everything counts.
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About ShipHero
ShipHero is a US-based, leading solution provider in the fast growing eCommerce fulfillment space. ShipHero served over $5 billion of eCommerce orders in 2020 and is growing rapidly. ShipHero provides warehouse management software for brands that operate their own warehouses as well as outsourced fulfillment as a service from ShipHero owned and operated North American warehouses. Some notable customers include Universal Music Group, Glossier and Canadian Tire. ShipHero is a Shopify Plus partner and more than 10% of Shopify Plus stores globally use ShipHero.
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Aug 2, 2023 | Blog
Are you tired of juggling numerous inventory lists and feeling like an amateur circus performer every time an order pings your system? If so, let us introduce you to the concept of a Warehouse Management System—not gonna lie, likely to become your new best friend. If you’re an eCommerce store owner who is fulfilling their own orders, we’re willing to bet your “storage” situation has spiraled far beyond that single shelf in your garage you started with. No judgment here; it’s a sign of success. But when your precious stock is scattered across every square inch of your house, and you find yourself tripping over boxes of widgets on midnight fridge raids, it might be time to get serious about a WMS!
Want to talk to an expert about your needs? Let’s chat!
What is WMS?
A Warehouse Management System, or WMS, is more than just a fancy acronym. It’s a comprehensive warehouse management solution that streamlines your warehouse operations and manages day-to-day inventory tasks. This software integrates with other key platforms, such as ERP (Enterprise Resource Planning) systems and AIDC (Automatic Identification and Data Capture) hardware, including RFID (Radio-Frequency Identification) technologies. It provides end-to-end visibility of your inventory levels, ensuring you have accurate data at your fingertips. And the WMS systems available range from basic solutions for small businesses to complex platforms for large enterprises.
Benefits of a Warehouse Management System (WMS)
Improved Operational Efficiency
A WMS enhances warehouse processes, transforming workflows to become smoother and faster. It automates tasks, eliminating redundant steps and reducing the chance for error. This automation includes the use of technology tools like wave picking, zone picking, and batch picking for order fulfillment, improving the productivity of your warehouse staff.
Enhanced Inventory Control
Inventory tracking is a breeze with a WMS. It provides real-time data on your stock levels, allowing you to maintain an optimal inventory at all times. This improved visibility over your stock prevents overstocking or understocking, making sure your warehouse space is used most effectively.
Cost Savings
Think of WMS as a financial friend, reducing costs tied to warehouse operations. By streamlining processes and improving inventory control, you’ll be able to make better use of your resources and save money. Plus, with more accurate pricing and cost data, you can make smarter business decisions.
Improved Order Fulfillment
A WMS ensures that the right product reaches the right customer at the right time, every time. By optimizing the picking, packaging, and shipping processes, it enhances the speed and accuracy of order fulfillment, leading to happier customers and repeat business.
Enhanced Visibility and Reporting
Warehouse management software is data-driven, offering a wealth of metrics and analytics to help monitor your business’s performance. You can track KPIs, generate reports, and gain insights into your operations, helping you to identify areas of improvement and make strategic decisions.
Increased Accuracy
From receiving orders to shipping goods, a WMS increases the accuracy of every step in your supply chain. By minimizing manual tasks and employing tools like AIDC, errors are reduced, leading to more precise inventory levels and better vendor relationships.
Scalability
Whether you’re a small business owner or running a large company, a WMS grows with your business. It’s designed to adapt to increasing inventory levels, additional warehouse locations, and more complex supply chains, making it a sustainable, long-term solution for your warehouse management needs.
Better Use of Space
Effective space management is key to efficient warehouse operations. A WMS helps you optimize your warehouse layout, ensuring goods are stored efficiently and your team can navigate the space with ease.
Compliance and Traceability
With a WMS, your business can comply with industry standards and regulations more effectively. It provides detailed tracking and traceability of items, making recall processes easier if necessary, and enhancing your company’s reputation with partners and customers.
Improved Supplier and Customer Relationships
By improving accuracy, compliance, and order fulfillment, a WMS also enhances relationships with vendors and customers. More accurate order and delivery data means fewer disputes and more trust from your suppliers and clients.
Labor Efficiency
When automating tasks and providing workers with clear instructions for picking, packing, and shipping, a WMS improves labor efficiency. This helps your warehouse team be more productive, reduces errors, and improves morale.
Enhanced Security
A WMS enhances the security of your warehouse operations by restricting access to inventory, tracking all movements, and providing comprehensive reporting. This helps protect your valuable stock and ensures only authorized staff handle certain goods or perform specific tasks.
Warehouse Management System Features and Functions
Inventory Tracking
Imagine knowing the exact location of any item, its quantity, and its demand forecast at the touch of a button. With a WMS, you can. Through sophisticated inventory tracking modules, you can maintain optimal stock levels and avoid both under and overstocking issues. This feature is not just a nice-to-have; it’s a must-have in today’s fast-paced industries.
Receiving and Putaway
The efficiency of your warehouse begins at the receiving dock. A good WMS guides your staff through the whole process, from checking the supplier’s delivery against the purchase order, to tracking licenses and units, and finally stowing items away. The software can direct your staff to the optimal shelf or pallet, balancing the need for space and the demand for each product. It ensures that everything finds its place, and no material is left stranded.
Pick-and-pack
Picking orders and preparing them for shipment is a critical task in warehouse operations. And a good WMS typically has a pick and pack software that helps you optimize picking routes. Depending on your needs, the system might suggest batch picking, zone picking, or another method that makes sense for your particular situation. The system’s goal is to minimize the time your staff spends on the warehouse floor, reduce errors, and streamline the whole process. The result? Happy staff and even happier customers.
Shipping
Once your orders are ready for delivery, the WMS takes the lead again. It can integrate with various shipping carriers to provide real-time transit updates, and even choose the best shipping option based on your requirements. The system can track thousands of shipments at a time, flagging up any issues or delays.
Reporting
And finally, what’s a good system without a way to monitor its effectiveness? This is where reporting comes in. A WMS provides an array of metrics, allowing you to measure the performance of your supply chain management and identify areas for improvement. In addition, it can even offer yard management features, giving you a 360-degree view of your operations!
How Do Warehouse Management Systems Work?
Inventory Control
At its most basic level, a WMS oversees your inventory levels, making sure you have just the right amount of each product. Using advanced automation tools and AIDC (Automatic Identification and Data Capture) technologies, the system can track the movement of materials throughout your warehouse, from the moment they arrive to the moment they leave as part of a customer’s order. This real-time visibility into your inventory is invaluable for managing your stock.
Task Management
A WMS doesn’t just oversee materials; it manages tasks and activities as well. It assigns tasks to warehouse staff based on their roles, expertise, and current workload, ensuring the right person is doing the right job at the right time. This can dramatically improve your warehouse’s efficiency and reduce errors, a key goal for any logistics operation.
Traceability
Every bin, pallet, and product in your warehouse leaves a digital footprint in the WMS. This provides unparalleled traceability, making it easy to find any item at any given time. It also helps with order accuracy, as the system can confirm that the correct items are being packed and shipped to customers.
Labor Tracking
A WMS isn’t just about products and orders; it’s about people too. The system can monitor your warehouse staff’s performance, using KPIs (Key Performance Indicators) to measure productivity, accuracy, and other critical metrics. It provides actionable insights that can help you boost your team’s performance, identify training needs, and even assist in resource planning.
Containerization
In a busy warehouse, every inch of space matters. That’s why WMS systems include containerization functions. They can determine the most efficient way to store and ship products, whether they should be on a pallet, in a bin, or in another type of container. This helps maximize the use of your warehouse space and can reduce shipping costs.
Labeling
Proper labeling is crucial for warehouse operations. It ensures that every item can be easily identified and found when needed. A WMS can generate and print labels that include all necessary information, from product details to barcodes for AIDC.
How to Choose a Warehouse Management System
Identify Your Needs
Every business is unique. The WMS that works wonders for one might not be the best fit for another. So, start by identifying your needs. Evaluate your current workflows, tasks, functions, and areas that need improvement. Do you struggle with inventory management, order fulfillment, or employee productivity? Understanding these requirements will set a solid foundation for your WMS search.
Determine Your Budget
While it’s true that a robust WMS can save you money in the long run, it does come with a cost. Establish your budget, considering not just the price of the software, but also any additional costs like training, support, and future upgrades. Remember, a higher price tag doesn’t necessarily mean a better fit for your business.
Evaluate different types of WMS
WMS solutions come in various shapes and sizes—from simple tools for small businesses to complex systems for large enterprises. Consider the scale of your operations, your growth plans, and the complexity of your processes when evaluating your options. Don’t overlook the benefits of SaaS (Software as a Service) solutions, which offer flexibility and scalability.
Consider the Scalability of the System
Your business isn’t static; it’s a living, breathing entity that grows and changes. The WMS you choose should be able to scale with you. Whether you’re planning to expand your product line, enter new markets, or open more warehouses, your WMS should be able to accommodate these changes without skipping a beat.
Check Vendor Reputation
The reputation of the WMS vendor plays a significant role in your decision. Do some digging. What do other clients say about them? Are they known for their reliable service, excellent customer support, and regular software updates? You want a partner, not just a provider.
Analyze the Level of Support
Speaking of customer service, make sure the vendor offers the level of support your business requires. This could range from online resources and email support to dedicated account managers and 24/7 hotline services. Remember, implementing a WMS is a significant change and having a supportive partner can make the transition smoother.
Request for a Demo
Never buy a WMS without seeing it in action first. Request a demo to get a feel for the system’s functionality, usability, and compatibility with your operations. Use this opportunity to ask questions and see how the system handles your specific tasks and challenges.
Check for Integrations
Your WMS will not work in isolation. It needs to integrate seamlessly with your existing systems—be it your ERP (Enterprise Resource Planning) system, accounting software, or eCommerce platform. Ensure the WMS you choose can play well with others to create a unified, efficient, and transparent operation.
Consider the Implementation Timeline
Implementing a new WMS is not an overnight task. It requires time, planning, and resources. Consider your timeline and how long you can afford to have your operations disrupted. Also, ask potential vendors about their implementation process, timeline, and how they plan to minimize disruption to your business.
Seek Professional Advice if Necessary
If you feel overwhelmed with the choices, don’t hesitate to seek professional advice. Consultants can provide valuable insights and help you choose a system that meets your needs, budget, and goals.
Key Takeaways
The goal of a WMS is to make your life easier, streamline your operations, and ultimately, boost your bottom line. And choosing the right WMS solution isn’t just about features; it’s also about finding a provider that offers the support, integration options, and scalability your business needs to thrive. No more tripping over boxes in your house! Instead get a WMS system to streamline your operations and give you more time back in your day.
FAQs
What is the Difference Between Warehouse Management and Inventory Management?
Inventory Management is all about maintaining optimal stock levels to meet customer demand without overstocking that could tie up your financial resources. On the other hand, Warehouse Management deals with how things happen in the warehouse, overseeing processes such as receiving, storing, picking, and shipping goods. So, while Inventory Management might tell you what you have and how much, Warehouse Management will tell you where it is, how it gets there, and how to do it all more efficiently.
What are the Different Types of Warehouse Management Systems?
Warehouse Management Systems come in various types, each designed to meet different business needs and budget constraints:
- Standalone WMS
- Cloud-based or SaaS WMS
- ERP modules
- Supply Chain Modules
What Role Does WMS Play in eCommerce Operations?
A WMS is often the backbone of the operations, overseeing everything from receiving products from suppliers, to storing and locating items in the warehouse. With eCommerce, you’re dealing with high volumes of individual orders, often with expectations of rapid delivery. A WMS can help streamline these processes, increasing efficiency and reducing errors.
