Following the e-commerce boom that resulted from the pandemic lockdowns, the popularity of third-party logistics providers has grown. More and more companies are looking to outsource the logistics side of their business, engaging 3PLs to provide stock storage and management, order pick and pack, and shipping dispatch on their behalf.
However, each 3PL is different, with differing services and operations they offer to their customers. We take a look at what customers are looking for from 3PLs, and how third-party logistics providers are leveling up their operations to meet demand.
What is a 3PL?
Third Party Logistics (3PL) providers are companies who provide warehouse storage, pick/pack and/or transportation of goods, on behalf of other businesses. For this reason, 3PL companies generally don't own the goods they handle and this makes them significantly different from Distributors or Wholesalers who purchase and own the products that they sell.
Working with Third-Party Logistics Providers
For some companies, outsourcing their logistics to a 3PL means they can be completely hands-off with the management of their stock and ordering. Choosing a 3PL provider who can integrate directly with their online ordering platforms and digital stores, means they can receive orders directly to the warehouse where the order can be picked, packed (with custom packaging as an additional service), and dispatched, all directly through the 3PL — including handling of return items.
Some 3PL customers may choose to be more hands-on with oversight of their inventory reporting in order to manage their own marketing (offering sales for high volume stock that is out of season), ordering (reordering best-selling stock when inventory is low), and other 3PLs do not generally track landed cost of goods or perform sales forecasting. For this reason, 3PLs require software that their clients (the distributors/wholesalers) are able to access to view stock levels, place orders, and track the status of a delivery.
With CartonCloud, the warehouse and dispatch services can be captured directly into the cloud-based WMS/TMS systems, capturing charges, stock levels, stock movement, order fulfillment, and tracking, with automated invoicing to streamline and simplify the process.
Capturing 3PL rates and charges
A big component of a 3PL is billing for storage, pick/pack fees and/or transport charges. 3PLs often have complex rating structures which differ per-client, and may vary considerably over time. Providing scalable and ad hoc rates is essential to accurately capturing 3PL rates and charges.
For one client a 3PL may charge storage charges based on the total number of items in storage on a daily basis and for another, weekly storage based on the number of pallet spaces. Within transport rate calculation it typically becomes much more complex with factors such as weight, cubic, from/to areas, truck size, day of week, waiting times, hand-unloads, seasonality, temperature of goods and many, many other ways of calculating pricing needing to be taken into account in order to price jobs correctly.
3PL E-Commerce fulfilment
If you're a 3PL looking to enter e-commerce fulfillment, it's vital you ensure your WMS has strong integration capabilities with online stores (ie: Shopify, Magento, WooCommerce etc). With software integrations, you can receive orders via API in real-time, are generally capable of handling larger order volumes (500+ orders/day) with low items-per-order and typically have integrations into courier systems or shipping aggregators such as Shippit or Sendle.
If you have customers with a high number of SKUs, or many products which look similar, ensuring that you have barcode scanning set up will allow you to ensure the correct products are being picked and packed.
For e-commerce 3PL fulfilment, you should also consider if your customers require return to sender functionality. With CartonCloud, you can simplify RTS processes, simply scanning the returned item back into the system, and reallocating it to a warehouse location.
3PL Distribution centre fulfilment
Distribution Centre (DC) fulfilment is vastly different to e-commerce fulfilment. In this industry, very careful attention must be paid to Expiration Dates and Lot Numbers. Walmart, Coles, Woolworths, Save on Foods and all other retailers in the food space have incredibly strict processes around expiration dates, so picking a provider who utilizes technology to ensure they are shipping the correct product batch is vital to avoid rejection.
Orders to distribution centres are much larger, often full truck-loads of pallets on one order. Some 3PLs may also provide services to aggregate multiple products onto a single pallet for smaller top-up orders placed by the DC, so it is important to evaluate your requirements prior to selecting a 3PL to ensure they can meet all needs. Also, time-slot bookings for the delivery are an essential aspect here, meaning it's often wise to work with a 3PL who can provide both the warehousing and transport functions to ensure on-time delivery to the DC. Splitting these two functions can add complication, as coordination is now required between two outsourced parties for every order.
From an integration perspective, EDI is still dominant in the DC space. If you are using SAP or other enterprise applications internally, you'll most likely require very tight 2-way integration with both the 3PL, and also your customer (Coles / Woolworths). You may also require the 3PL to be directly integrated with these providers so they can send Advanced Shipping Notices (ASN's) directly to the DC prior to delivery.
Find out how 3PL warehousing provider B2C Logistics revolutionized their 3PL operations with CartonCloud's WMS. They took their operations from a paper-based system, picking and packing for a range of supermarket customers, with automated sales orders and purchase orders, integrated into their system, they have turned a non-profitable operation into a profitable one.
With CartonCloud, they have been able to reduce overheads by over 20% and improve accuracy, allowing them to grow their business with ease, and say yes to new business.
Want to know more about 3pl management software?
Get in touch with the team at CartonCloud to find out more about how our cloud-based WMS and integrated TMS can help you take your 3PL warehouse to the next level.
Request an obligation-free, FREE Demo to see our software in action today, and make sure your 3PL is ready for the peak season demand.