Learn More About 3PL Software
What is 3PL Software?
A typical supply chain consists of three independent businesses conducting three different steps to get a product all the way to a customer's doorstep. The first business is the designers and creators of the product. These are the companies that create the actual product that will be sold to consumers. Once this company creates their product, they generally need a second party logistics provider such as UPS or FedEx to deliver the product to the customer. Even though that second-party logistics provider can handle the shipping, there still needs to be that company that can hold all of those products and place them onto those shipping trucks. That’s where third-party logistics providers come into play.
A 3PL is the intermediary business that handles the distribution necessary to have products delivered to the customer’s doorstep. 3PL’s are essentially warehouses and distribution centers that house all a business’s products. They are usually in strategic locations where there are high shipping volumes, so they can quickly reach customers’ doorsteps. With all these moving parts in the supply chain between a business and the customer, there needs to be a medium for businesses to communicate with these 3PL’s. By the same token, there also needs to be a simple way for 3PL’s to handle all of the logistics that come with warehousing and fulfillment. This is where 3PL software comes into play.
3PL software is designed to streamline the process for both third-party logistics providers and the vendors that hire them. For the vendors, 3PL software can help them keep in communication with the 3PL’s they hire. For 3PL’s, 3PL software can help them with all the logistics necessary with warehousing, distribution, and customer communication. Since 3PL software offers a wide range of functions, we will highlight all of the ways warehouses, distribution centers, and 3PL’s can take advantage of the software.
Key Benefits of 3PL Software
- Improve transparency and communication between third-party logistics providers and vendors
- Improve warehouse management, distribution, and order management for 3PLs
- Cost and time savings for both 3PL’s and vendors
Why Use 3PL Software?
3PL software has a variety of different benefits for carriers, shippers, distributors, and retailers. First and foremost, it drastically improves the communication between third-party logistics providers and the businesses that outsource their supply chain. This allows businesses that outsource their distribution to have more visibility into how their supply chain is performing. Secondly, 3PL software can greatly improve daily operations for third-party logistics providers. 3PL software contains features that aid in the process of warehousing, order management, and distribution. Lastly, it can aid third-party logistics providers with communicating with shipment companies. 3PL software provides features that allow those 3PLs to choose the best carriers, and rates for shipping. Additionally, 3PL software provides features that allow 3PLs to communicate and update about shipment arrival times.
Improved client relations — Most third-party logistics providers work with multiple clients. With all of these clients, third-party logistics providers usually have to manage lots of data, invoicing, and logistics. 3PL software helps these companies keep all this data in one centralized location. 3PL software can help them store customer rates and automatically bill for warehouse services and storage.
Customization — Most 3PL’s handle the distribution for a variety of clients who all have different work orders and different billing cycles. With 3PL software, 3PL’s can customize handheld fields and behavior for each specific work order. This allows the third-party logistics providers to cater their work to a variety of clients.
Who Uses 3PL Software?
Public warehouses — For warehouse managers that work for a third-party logistics provider or even for the company that designs the product themselves, 3PL software can be a great tool to manage inventory. 3PL software has specific functions designed to track items within a warehouse, automate orders with shopping cart integrations, and automate customer notifications of important inventory activity.
Distributors — Distribution centers differ from warehouses in that they generally hold products for shorter periods of time. Distribution centers are specially designed to quickly transfer products from the distribution center to the customer. As a result, distributors generally move at a faster pace than warehouses and are expected to communicate with customers. 3PL software can help distribution centers with the rapid turnaround of goods by having barcode scanners track items and a customer portal with inventory, billing, and reporting information.
Kinds of 3PL software
Asset-based 3PLs— Asset-based 3PLs own some or all parts of the supply chain. This can include trucks, warehouses, and distribution centers. Asset-based 3PLs require a wider suite of features in their 3PL software since they also handle shipping, fleet management, and warehouse management. Asset-based 3PLs might be better suited choosing a 3PL that caters to warehouse, inventory management, and shipping needs.
Non-asset based 3PLs — Non-asset-based 3PLs don’t own physical assets involved in the supply chain. Rather they are simply meant to act as a third-party that provides a network of partners to help companies move products. They require a software less involved with warehouse management and more focused on booking freight and communicating with their network of shippers and carriers.
3PL Software Features
Warehouse management — One of the main features of 3PL software is warehouse management. This allows businesses that work with 3PL providers to know exactly where their client’s shipments are at all times. They can even look at inventory levels in real time of the third-party logistics provider to indicate to potential customers that a product is out of order. For 3PLs, warehouse management features allow them to track warehouse performance and evaluate inbound value added services by client.
Documentation — Documentation features allow businesses to store all file types in inventory records to accurately document inventory, freight, warehouse, and distribution needs.
Billing — Billing features allow third party logistics providers to capture and bill for every service the operation provides. This feature also automatically posts invoices to the customer’s ledger and automatically bills businesses based on the respective contract.
Customized workflows — 3PLs work with a variety of different clients. Some of these clients might design products that have barcodes or RFID tags attached to them, making it easier for 3PLs to identify when it reaches the distribution center. On the other hand, some clients may not have any tracking technology. This would require extra steps in the supply chain. With 3PL software, 3PLs can customize workflows based on different clients. This allows staff to complete work at a faster pace following the workflow that is laid out for them in the software.
Analytics — Many 3PLs measure the results of their operations through manual writing and hard copies. This is a tedious process that makes it difficult for 3PLs to evaluate how they are actually performing. 3PL software makes it easier for 3PLs to receive immediate insights into how they’re performing by providing a standard set of visual reports and metrics.
Fleet and transportation management — For asset-based 3PLs, fleet management and transportation management are a necessity. 3PL software offers features that allow 3PLs to conduct dispatching and load planning as well as order management, rating, and billing.
Shipping — Shipping features provide distributors and 3PLs with a simple way to select carriers who ship the product to the final destination. This feature can help users maximize costs by providing a list of carriers that offer the best rates.
Potential Issues with 3PL Software
Rules and regulations — This is not so much an issue with the software as it is with 3PLs in general, but it is still something to keep in mind. A business with a global supply chain that is outsourcing their distribution needs to keep in mind that there are different shipping rules and regulations for different countries and regions. Some 3PL software do not indicate the rules and regulations for each country, so it is something to be mindful of before incurring any penalties or fees for not following regulations.
