WAREHOUSE BASICS: What is 3PL Warehouse Management System?

Warehouse operators are responsible for the timely and accurate handling, storage and processing of goods.  Many inventory owners, however, choose to outsource warehouse operations to 3PLs.  Most third party logistics providers service multiple customers, each with specific needs and requirements.  Today’s logistics operations are fast-paced and require use of supply chain management software solutions.  3PLs and operators of warehouses and distribution centers rely on warehouse management software to efficiently manage the complex nature of warehouse operations, keep costs under control and provide the information visibility needed for quality decision making.

Software for 3PL companies must be able to meet the needs of each specific customer such as for billing, labeling, reporting, operational processes, etc.  The best 3PL warehouse management software is developed “from the ground up” to handle the many-to-many relationship required to service multiple customers. In other words, the software foundation was developed to fit the complex 3PL business model.   Although some companies market 3PL warehouse management software, often the systems were originally developed for distribution of goods for a single owner of inventory, less complex operations. It is important to note here that it is possible to find and buy 3PL distribution software.    In this case, the software will have system gaps that will need to be addressed using patches and fixes. 

Whether web based or on premise, a 3PL warehouse management system should include basic capabilities plus specific features for servicing a wide variety of individual customers including:

WMS Features:

• Inventory control
• Packing and shipping functionality
• Comprehensive warehouse management operations including cycle counts
• Ability to integrate with other software and systems

Essential 3PL WMS Software Capabilities:

• Ability to customize the following for each customer:
  • Labels
  • Reports
  • Operational processes
  • Billing

Here are some frequently asked questions about WMS for 3PL providers:

What about pick pack and ship? Is this something I should look for in third party logistics WMS?

Yes, if your 3PL warehouse services ecommerce, manufacturing or retail customers that fill individual orders for consumers and will need to pick and ship by the piece.

What should I expect when I fill out a demo request for WMS software?

Typically, your account will be assigned to a sales team member who will then reach out to you to learn more about your operation, needs and project requirements.  Most software vendors will demonstrate software capabilities, show functionality like reporting tools and other WMS features.  Beware if a WMS software vendor shows you a canned presentation instead of actual warehouse management software working in real time!  It is best to have some questions and be ready to discuss specific challenges you are facing in your business so that you can be shown how the software can work for your company.

Why is it so hard to find a good 3PL billing system?

In a warehouse management platform built as a 3PL solution, the software must be able to isolate every action related to each piece of inventory owned by each customer.  3PL providers usually perform a range of value-added services for their customers.  To be able to bill accurately and efficiently for these value-added services, the 3PL software needs to be able to capture and bill according to the contract rate as the activity is performed.  Many WMS systems designed to handle the management for 3PL operations lack this capability and the flexibility to be able to bill to meet customer needs.  This means that some billing must be done manually, via workarounds that are error-prone and more labor intensive.