The Core Challenges Hurting 3PL Profitability
Robust cost management, operational efficiency, and strategic pricing are key to 3PL profitability. Between fluctuating energy costs, rapid technological advancements, space limitations, labor shortages, and a handful of other challenges outlined below, third-party logistics companies (3PLs) must find innovative ways to keep costs low and clients satisfied.
The Revolving Door: Labor Productivity and Attrition
Operators in the 3PL space face high costs associated with recruiting, onboarding, and training. The industry is also in the midst of a talent shortage, which has made acquisition and retention a prominent challenge among warehouse operators. Outdated technology and overall supply chain inefficiency amplify these labor challenges, which increases stress on the workforce and boosts the potential for burnout. Manual processes and inefficient workflows lead to low morale, errors, and high employee turnover.
The High Stakes of SLA Compliance
An SLA is a formal contract between the 3PL provider and the warehouse operator that details the services included and the provisions for penalties resulting from noncompliance. Unfortunately, the risk of financial consequences, chargebacks, and reputational damage that result from missed shipping deadlines and inaccurate orders is all too real. Plus, warehouse operators are under immense pressure from clients who demand perfect execution and real-time visibility.
3PL Warehouse Management Software: Definition and Differentiators
3PL warehouse management software (WMS) is a specialized application that enables warehouse operators to manage and support multiple clients within a single platform.
A standard WMS is designed for a single company to manage its own inventory, while a 3PL WMS is built for multitenancy, so it can manage inventory, processes, and billing for multiple, distinct clients within the same warehouse. Key 3PL features include:
- Multiclient architecture: Managing inventory and processes for multiple customers in a single facility. (Bonus: Datex improves onboarding for new 3PL clients to save time and money!)
- Complex 3PL billing: Automating billing for storage, handling, and value-added services
- Client visibility portals: Providing customers with self-service access to their inventory and order data
Key WMS Functionalities to Tackle Labor and SLA Crises
When assessing the features and functionalities a 3PL WMS offers, consider the business outcomes you’re looking to achieve, and whether the system is engineered to help you get there easily. A WMS should simplify complexity, not add to it. The right platform aligns with your operational goals, supports the way you actually work, and complements your broader business strategy without requiring workarounds or costly customizations. For example:
Boosting Labor Productivity with Intelligent Task Management
Premium warehouse labor management software features, such as directed putaway, task interleaving, and RF scanning, optimize workflows by scheduling, assigning, and tracking workforce activities. Built-in performance dashboards track individual and team productivity, enabling data-driven guidance. Plus, intuitive, guided mobile interfaces reduce training time for new hires from weeks to days.
Ensuring SLA Adherence with Real-Time Control
A formal warehouse SLA management system provides dashboards to monitor order aging and fulfillment deadlines. You’ll want to ensure it has functionalities such as automated alerts to flag at-risk orders, which allows managers to proactively intervene. The system should be capable of supporting complex fulfillment logic, such as first in, first out/last in, first out and batch/serial tracking, to meet specific client requirements.
Automating Complexities with a True 3PL Foundation
Advanced 3PL billing software capabilities can capture every billable activity automatically to help eliminate revenue leakage. Adequate multiclient warehouse management is paramount for segregating inventory and preventing cross-client errors. Lastly, the right WMS software offers seamless integrations for omnichannel fulfillment, connecting to e-commerce platforms, electronic data interchange, and shipping carriers.
Selecting the Right 3PL Software Partner for Growth
To select the right 3PL software partner for growth, operators must shift their priorities from specific features to strategic selection criteria, such as:
- Scalability: Your cloud warehouse management system should grow with the business, enabling you to add new clients, users, and facilities without disruption.
- Configurability: It’s critical to have a system that can be configured to unique client workflows without costly custom coding.
- Support and Expertise: Look for a vendor that understands the nuances and unique challenges of the 3PL industry.
By partnering with the right 3PL software provider who meets these criteria, you’ll have the foundation needed to shift your warehouse operations from expense management to revenue generation.
Optimize Costs While Exceeding Client Expectations
A dedicated 3PL WMS is key to breaking the cycle of labor inefficiency and SLA failures. This technology empowers operations leaders to gain control, drive productivity, and exceed client expectations.
But the right software partner is imperative, and operators need to be sure they’re selecting the right 3PL software partner for growth. Take a self-guided preview with Datex to learn what makes our Footprint WMS the ideal solution for 3PL providers.
FAQs: Third-Party Logistics Warehouse Management Software
What is the difference between a standard WMS and a 3PL WMS?
A standard WMS is designed for a single company to manage its own inventory. A 3PL WMS is built for multitenancy—it can manage inventory, processes, and billing for multiple clients within the same warehouse. Key 3PL features include automated 3PL billing, client-specific workflows, and customer web portals for visibility.
How does 3PL software improve labor productivity?
3PL software improves labor productivity by optimizing workflows with system-directed tasks, reducing travel time with intelligent picking paths, and minimizing errors with RF scanning validation. Its intuitive user interface also drastically cuts down on training time for new employees, addressing the high attrition challenge.
Can a 3PL WMS handle billing for different clients and services?
Yes, this is a core function. A robust 3PL WMS includes a 3PL billing software module that automatically captures all billable activities, such as receiving, storing, picking, shipping, and value-added services. It can apply unique rates and rules for each client, ensuring accurate and timely invoicing.
Can a WMS help with FSMA, HACCP and DSCSA compliance?
Yes, a modern WMS is a critical tool for FSMA, HACCP, and DSCSA compliance. It automates the data collection and recordkeeping these regulations require, providing a complete digital audit trail for temperatures, lot movements, and quality checks. This simplifies audits and demonstrates proactive compliance.
Is cloud-based 3PL warehouse management software better?
For most 3PLs, a cloud warehouse management system is the superior choice. It offers lower up-front costs, greater scalability to add clients and warehouses, automatic software updates, and secure access from anywhere. This allows 3PLs to stay agile and competitive without managing complex IT infrastructure.