6 Tips for Reducing 3PL Warehouse & Logistics Operational Cost

New ideas for tools and resources that can help reduce operating costs for 3PLs, warehouse & DC operations
Companies across the supply chain industry continue to focus on cost savings.  Keeping supply chain logistics and warehouse operating costs under control is essential to ensure that third party logistics providers, warehouse and DC operators can remain competitive in today’s tough, crowded marketplace.  Cost management is also essential to keeping the cost of goods affordable for consumers as well as for businesses.

In an earlier blog post, we provided some tips for ways that warehouse labor costs could be reduced to increase profitability as well as how manufacturers could use third party logistics providers to reduce costs.  In addition, we have provided tips to improve warehouse operations to boost profitability.

This post, however, looks at generating cost savings from an entirely different perspective.  Rather than examining warehouse operations and processes for potential improvement, this post focuses on taking a pro-active approach.  From preventative maintenance and minimizing cybersecurity risks to technology selection and utilizing third party vendors to find cost savings, warehouse, 3PL and DC operators can find hidden cost savings and other benefits from streamlined efficiencies, top notch customer service and ensuring operational uptime.

1. Reduce Downtime to Prevent Labor Productivity Lapses

Target Preventative Maintenance

Take a pro-active approach to your warehouse facility, tools and equipment.  Whenever equipment, mobile computers or tools break down, not only is it frustrating but also a major drag on labor productivity as well.  Unscheduled repairs can be costly in terms of man hours, reduced safety, customer service and errors.

Think about it.  From mobile printers and handheld computers and barcode scanners, forklifts, cranes, conveyors, palletizers, sorters and other equipment, when a valued tool breaks down, it can disrupt more than just a few workers.  It can reduce order fulfillment rates, customer satisfaction and even wreak havoc across an entire facility.

Yes, initiating a preventative maintenance program can be a bit cumbersome and time consuming.  The rewards in terms of workforce productivity, worker morale and other factors will be well worth the effort.  To start, focus on plans for how to maintain the flow of current operations without disruption.  Keep the plan clear, straightforward and easy to follow.

Make sure you can monitor the status of all equipment and have a process in place to maintain the monitoring effort.  One issue that often comes up in warehouse operations is cleaning.  Having a clean floor around equipment not only ensures safety but also provides the visibility necessary to spot problems with quickly so that the issue can be resolved.  Some preventative maintenance must be conducted on a regular, routine basis rather than simply once a year.  Making sure that potential problems are easy to spot and resolve helps reduce downtime, frustration and wasted man hours in the warehouse.

Here are some tips for developing a preventative maintenance program for your warehouse operation:

  • Take stock. Prepare a comprehensive list of assets.  Next, using the list, determine the processes and procedures needed to achieve your company’s specific goals for preventative maintenance, uptime and workforce productivity.
  • Identify the maintenance steps, processes and procedures needed to keep the assets in working order.
  • Consider using a computerized maintenance management system (CMMS). Using a CMMS, your company will be able to maintain data about your maintenance operations and provide this to your equipment vendors, potentially reducing time spent troubleshooting problems and errors.  Having this data at your fingertips also empowers you with vital metrics about the operation of your equipment, essential to solid decision making.
  • Create a stock list of items needed to ensure maximum uptime, including replacement batteries, chargers, etc.
  • Reach out to your equipment vendors for help and resources. Equipment suppliers may be able to provide preventative maintenance specifications, guidelines, best practices and valuable processes for keeping your equipment in top working order.
  • Data…data…data. Capture and use equipment downtime data to provide insight into significant problem areas and conditions. This may be instrumental in preventing future failure or disruptions.
Transitioning from random repairs on an as needed basis to executing preventative maintenance actions may be challenging for some operations but well worth the cultural shift.

Scheduling for routine or preventative maintenance is key to long term successful efforts to reduce downtime.  Fixing problems as they happen is only repairing equipment that has become damaged, not extending the life of the valuable asset or preventing unplanned downtime.



2. Reduce Cybersecurity Risks & Operational Downtime by Keeping Systems Safe

Today, there are threats to your operation from well beyond the four walls of the warehouse.  Preventing cyberattacks, data theft and data breaches take planning and careful execution.  The cost to your business from data theft of such information as individual client details could be thousands of dollars, plus damage to your reputation, costs that are immeasurable.  Data breaches can also provide cyber criminals and others with private information about companies that, when leaked, can have an impact on stock prices.

Another costly problem involved in cybersecurity breaches is shipment theft.  This can occur if criminals are able to access the shipping details for particularly valuable or desirable goods or packages, enabling them to potentially intercept and steal the goods before they reach the intended destination.  Keeping data private through proper cybersecurity practices and tools ensures that data is available only to those authorized to have access to it, preventing costly shipment thefts, insurance claims and lawsuits.

Ransomware is another threat to third party logistics providers and warehousing and distribution operations.  With the rapid acceleration in the use of technology in warehouse and logistics operations, including IoT and digital systems, risk to supply chain operations has expanded.  Keeping your business safe means engaging and training your team, changing and executing the proper processes and educating clients, vendors and others to keep your business safe.

Consider working with a consultant or third part cybersecurity service provider.  Cybersecurity service providers such as Telos can provide a wide array of services to help protect your warehouse operation.  Services vary by cybersecurity solution provider but most offer services such as:
  • Vulnerability and risk assessment
  • Risk management service
  • Compliance solutions
  • Software assurance and managed cybersecurity services
  • Training on best practices and information assurance
  • Penetration testing
  • Application-level security services
  • Incidence response
The cost of data breaches, ransomware attacks and cybersecurity attacks can cost your business thousands of dollars or more and cause immeasurable damage to the reputation of your company.  In addition, investing in cybersecurity solutions can help to ensure operational uptime, ensure the satisfaction of your clients and provide peace of mind.



 3. Reduce the Cost of Freight Using a Seasoned Freight Audit Solution Provider

Companies that specialize in freight bill auditing and payment can be valuable resources by providing 3PLs and other supply chain businesses with the means for more effective transportation expense management.  Using a freight audit and payment solution provider can reduce the administrative burden on your staff.  By relying on a freight bill audit and payment solution provider, your business will benefit from having experts with years of experience audit invoices to create cost savings and provide you with actionable business intelligence that meets your business needs.

Success from freight bill auditing and payment efforts is largely due to the way data is leveraged to scrutinize invoices and find billing errors.  Freight bill mistakes can be extremely costly, adding up to thousands of dollars in inaccurate rates and accessorial charges.  Today, data is used to provide insight in addition to isolating costly errors.  Knowledgeable freight audit solution providers combine years of experience in freight and supply chain consulting expertise with deep analytics to help their clients make better strategic and tactical decisions which streamline efficiencies and remove costs from the equation.

A freight audit solution provider can identify billing errors, ensure that complex contract terms are being billed accurately and appropriately to find hidden savings.  Typically, sophisticated software is used to evaluate every freight transaction for possible errors.  Once potential errors are identified, the freight audit is taken over by trained, experienced freight audit professionals.

For optimal speed, accuracy and efficiency, it is important to select one that uses automated freight audit software that can be modified or configured to accommodate the specific business rules of your business.
For best results, it is important to find a freight audit solution provider that has advanced software capable of detecting duplicate invoices and checks on:
  • Bill of Lading number
  • Invoice number
  • PO number
  • Invoice type (such as balance due, accessorial charges that are billed separately, etc.)
  • Date of shipment
  • Charge type (accessorial charges, services, etc.)
Here are a few other issues you may need a freight audit solution provider to be able to handle:
  • Pool shipments
  • Stop-offs
  • Milk runs
  • Intermodal shipments
  • Rule 11
  • White glove service
  • Spot quotes
  • Industry-specific movement types
  • Auditing and monitoring of spot quote activity and ad hoc shipments
Cass Information Systems is one of the most experienced freight audit and payment solution providers in the industry today.  From its advanced accounting capabilities and advanced systems able to handle highly complex transportation infrastructures and business rules to their ability to create customer-specific solutions for shippers, Cass Information Systems has proven year after year to be both an innovator and industry leader.

Can using a freight audit solution provider make a difference for your 3PL warehousing business?  The savings in freight could be substantial.  Take a look at your annual freight cost.  If a freight audit could save even one half of one percent annually, how would that impact your operational cost?

4. Expert Auditing for Errors and Savings Produces Results

3PL warehouse and DC operations also rely on communications and other systems including telecom, Internet connectivity, electronic payment processing and small parcel shipping.  Processing, troubleshooting, examining and isolating the errors on all the invoices involved with these systems in house is cumbersome, time consuming, labor intensive and usually of limited success.

The good news is that there is professional help available.  Independent solution providers such as Schooley Mitchell are available to provide objective professional advice and careful analysis to help your business ensure that you are receiving and paying for optimal telecommunications, card processing, small parcel shipping and courier services at the best prices.  Acting as a single point of contact, Schooley Mitchell representatives evaluate billing and find savings for your business.  Schooley Mitchell charges a fee based on a percentage of the savings their efforts generate.

Here are some of the services provided by Schooley Mitchell to help you reduce operational costs for your business:
  • Analysis of services for credit card processing, telecom services, small package shipping and courier costs
  • Evaluation of bills for error identification and recovery
  • Optimization of telecom services. This can include long distance, landline, wireless, data, internet, conferencing and other services
  • Recommendations for technology
  • Additional professional services such as hardware upgrades and installation, network integrations and more

5. Using a Vendor to Find Utility Bill and Property Tax Savings

For 3PLs, warehousing and distribution operators as well as other businesses across the supply chain, using a bill auditing service to examine utility bills can produce savings gains, refunds and better utility rates.  When selecting a utility bill auditing service, look for specific experience in auditing utility bills.  Experienced auditors and consultants are familiar with rate and tariff structures, how to obtain refunds and better utility rates and are accomplished at dealing with a variety of different utility providers.

Typical utilities covered include:
  • Telecommunications
  • Natural gas/propane
  • Electricity
  • Water/sewer
  • Trash removal

Here are some questions to ask when selecting a utility bill audit solution provider:

  • Is the vendor accustomed to auditing more than one type of utility bill?
  • Does the vendor use technology to find errors and identify cost savings?
  • What is the procedure for uncovering errors?
  • Does the vendor try to recover savings on past as well as on current and future utility bills?
  • What is the time frame for recovering funds and obtaining bill credits?
  • Can they provide references that you can contact?
  • Does the vendor have experience in dealing with the utility companies your business uses?
  • How familiar is your vendor with the rates and tariff structures charged by the utility companies you use?
  • Is the vendor familiar with local tax and incentives?
  • Does the vendor keep up with current and pending changes to taxes, rates and other matters that may impact your utility bills?
  • Does the vendor help you obtain refunds, credits and better rates or only advise you how to do this?
  • What is the process for analyzing your utility bill costs?
  • Can the vendor provide forensic auditing on audits that were previously conducted by other utility bill auditors if requested?
  • What is the risk of using the service?

Some utility bill auditors also provide other services such as advice on reducing property taxes.  Here are a few companies which provide utility bill auditing services:

6. Using the Right Technology for Your 3PL Warehouse Operation

Innovative technologies have been embraced by the supply chain industry.  From transportation management systems and advanced information technology architecture to the transition to the digital supply chain, supply chain logistics partners are relying on technology to automate and streamline operations so that labor and operations costs and errors can be reduced.

In today’s fast-paced world that is quickly undergoing a massive digital transformation across the total supply chain, 3PL providers are selecting supply chain solutions that can enable them to maximize their ability to provide a wider array of value-added services, facilitate transportation management and enable end-to-end supply chain visibility.  From pick and pack to inventory management, being able to handle, store and fulfill orders for any kind of inventory is now essential and using the right kind of technology is the key.


3PL Warehouse Management Software (WMS)

Are you using cutting edge technology or falling behind using an outdated, legacy warehouse management system in your 3PL warehouse?  If so, your business is probably missing the boat on savings and labor productivity, a waste of thousands of dollars annually.   Legacy WMS typically cannot handle the complexity, speed and volume of transactions and activities needed in today’s warehouse, fulfillment or distribution operation.  No longer limited to shipping goods by the pallet, today 3PL, warehouse and DC operators need to be able to accommodate much more complex needs including pick and pack and shipping directly to consumers.

As a third party logistics provider, your company handles, stores, ships goods and fulfills orders for a variety of clients, each with their own specific needs and requirements. To maximize your profitability, you need a warehouse management system developed specifically for 3PL operations, one that
  • Is workflow-driven, flexible enough to accommodate the specific requirements of each client, including customization of business processes, reports, invoices, labels, documents and more. Using a workflow-driven WMS enables easy customization and configuration without costly changes to software source code.  This also results in streamlined implementations, saving costly professional fees.  Using a workflow-based WMS also facilitates speedier onboarding of new customers to your 3PL so that you can start generating revenue more quickly for your business.
  • Has advanced 3PL billing capabilities, adaptable enough to bill for any type of service, contract terms, etc. This will make sure that you can satisfy the specific needs and requirements of each of your customers effortlessly and accurately.
  • Can enable you to capture and bill for every value-added service your business provides, ensuring that no money is “left on the table”.
  • Provides real time access to inventory, orders, shipments, reports, invoices and more via a web portal
  • Enables you to easily scale your operation, up or down without costly changes necessary to software source code
  • Can handle any type of inventory, currency, process or requirements
  • Enables you to handle complex processes, high speed and high volume operations, SKU proliferation and other complexities
  • Provides real time enterprise-wide visibility
  • Facilitates improved decision making through customizable reporting and dashboards
  • Incorporates labor management features such as multi-task interleaving into the software
  • Provides a full suite of 3PL WMS features including crossdocking, transloading, track and track, returns processing and/or reverse logistics, dock door appointment scheduling, QA/QC, kitting and assembly and more
A leading-edge WMS developed to handle the complexity of today’s 3PL, warehousing and fulfillment needs can streamline operations, reduce cumbersome processes, provide actionable intelligence for better decision making and boost workforce productivity.  Having the right technology in place can not only help keep costs under control, but also help you win new business and keep existing clients satisfied with your 3PL services.

Web Portal to Facilitate Self-Serve Operations for Your 3PL Clients

Third party logistics providers often choose to provide web portals to their customers to enable them to have access to critical information about their inventory, data, shipments and orders.  Having a portal that is designed to empower customers to be self-sufficient can provide considerable operational savings on customer service labor and ensure improved client satisfaction ratings.

How many times do customers call your office every day for help?  Having a web portal that is easy to learn, use and operate helps customers to act independently, gain insight into operations, answer their own billing questions and have real time information at their fingertips whenever they want it.  For a 3PL, a well-designed web portal is a small investment that produces major benefits and substantial savings.

Because so many users choose to access information today on mobile devices, a 3PL web portal must be mobile friendly. Mobile friendly portals are often developed using HTML5, automatically sizing views for any type of device.  This improves the user experience and makes the information clearer and easier to read and use on the screen.

Using an advanced web portal for your 3PL warehouse operation can save thousands of dollars on customer service, it can also speed up operations for your clients and enable them to have a hand in their operations including inventory management, order fulfillment and shipments.


Looking for new ways to keep costs under control in your 3PL warehouse or distribution center?  Whether your business handles warehouse management or provides transportation management as well, there are ways you can squeeze more cost savings out of your operation using third party tools and resources or an advanced warehouse management system and web portal.  Developing an effective, realistic preventative management system for your facilities, no matter the warehouse locations can result in maximum uptime and workforce productivity.

From utility bills, freight invoices, property taxes and other expenses, expert third party vendors can work with you to determine savings and help your business recover credits, refunds and additional savings.  Most services are paid a fee based on a percentage of the savings they generate for your company.  Now that is a powerful incentive!

Finally, having the appropriate technology for your operation ensures that you can keep costs under control, maintain high rates of labor productivity and customer service and remain competitive.  Having the appropriate technology for your type of business is an important issue. Ensuring that your business is safeguarded against cybersecurity risks is another.  Cyber crime has increased across the supply chain and can be costly to your operation in terms of downtime, loss of reputation, workforce productivity and more.  Relying on a third party cybersecurity firm for help can produce savings and make sure that supply chain risk is reduced.  Making sure that your business has addressed and planned for cybersecurity risks can help you ensure customer satisfaction and win new business.

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