From complex to competitive: how 3PLs can simplify warehouse operations & maximize profits

Understand the main challenges facing 3rd party logistics providers (3PLs)
Deep dive into the 5 pillars of smooth warehouse operations
Discover why system integrations are so important
Access resources for launching a warehouse digitalization strategy

3PLs: Managing complexity

The global third-party logistics (3PL) market is projected to reach a value of 1.59 trillion by 2028(1). But with rapid growth comes growing pains, and the pressure on both staff and systems is showing, with productivity in warehousing and storage recently dropping by nearly 8%(2).

3PLs are now faced with more complexities than ever before – managing multiple clients and warehouses, working across numerous IT systems, quickly onboarding new customers, as well as the everyday operations of inbound orders, returns, inventory management, reporting, and more.

Pillar 1: Enterprise resource planning (ERP)

ERP Software is an ‘umbrella’ tool used by organizations to automate and manage their everyday activities. It usually covers core business processes such as finance, procurement, compliance, and supply chain. To fulfill orders, 3PLs must retrieve data from their clients’ ERPs (or directly from the clients themselves if no ERP is in place).

ERPs are an all-in-one solution and although many offer ‘WMS modules’ or add-ons to automate warehouse operations, it’s recommended to choose a standalone WMS that can track inventory in real-time, generate reports, and utilize AI to more efficiently organize products in the warehouse.

Pillar 2: Warehouse management system (WMS)

A WMS is the beating heart of your warehouse operations. This specialist software manages products from the moment they enter the warehouse (inbound receipts) until the time they leave (outbound deliveries). Some more sophisticated WMS systems offer advanced functionality such as warehouse automation, pick by voice, and dangerous goods management.

The main benefit of a WMS is that you gain full visibility and ultimate control over your inventory. For 3PLs, this is particularly important, as you’re often managing goods from multiple clients in one warehouse, and/or managing multiple warehouses in different locations.

A powerful WMS enables 3PLs to intelligently utilize space in the warehouse. For example, your WMS can direct incoming pallets to the most suitable locations, consolidate inventory, and even run multiple flows from the same warehouse (such as B2B and B2C fulfillment). All of these factors maximize the amount of inventory stored and reduce the time taken to find products, therefore increasing profitability.

As a WMS sits at the core of all warehouse activities, it’s imperative that it seamlessly integrates with all other technologies in the warehouse. Skip to the end for a deep dive into integrations, or keep reading to learn about the other digital pillars that support smooth warehouse operations.

Pillar 3: Middleware

Many (but not all) modern businesses deploy an integration platform, or ‘middleware’, to communicate between their different systems in the warehouse. This relationship is often between the WMS and ERP, and between the WMS and TA/TMS.

Simply put, middleware can ‘translate’ between different IT languages e.g. Excel and JSON, and build connections between different software platforms. It can also receive traffic or incoming information and route it to the right system.

Middleware can save a lot of time and resources for 3PLs, as it handles large amounts of information being received from multiple customers at once.

Pillar 4: Transport administration (TA) / Transport management system (TMS)

Sometimes referred to as a TA, a TMS handles the logistics and transportation of goods. This covers complex and data-driven decisions such as load planning and execution, freight tracking, payment, as well as reporting. A TMS is the key to ensuring your goods arrive on time and undamaged. And when you consider the complexity of managing multiple clients spread across different warehouses, you can see how vital this software is for 3PLs.

Pillar 5: Warehouse control system (WCS)

Not all 3PLs will have a WCS present in their warehouse IT architecture, as they oversee the management of hardware. If you have automated material handling equipment such as shuttles, palletizers, sorters and conveyor systems in your warehouse or distribution center, it’s likely you’re using a WCS.

A WCS will direct the activities of the hardware in real-time, and integrate with the software of the WMS to manage the flow of inventory. More recently, AI has been utilized to orchestrate the machinery and equipment within a warehouse.

5 Pillars, One Integrated Solution

The systems required to run 3PL warehouse activities are extremely complex. The danger of implementing up to 5 different tech tools is that they can operate in silos and lack integration capabilities. The cost? Sluggish operations, expensive errors, demotivated staff, and unhappy customers.

That’s why we created NYCE.LOGIC – a robust yet agile WMS system that can be implemented and scaled quickly. Refined together with our 3PL customers over the past +20 years, we have built a unique, industry-first integration interface within NYCE.LOGIC. This means that 3PLs can use one portal to view all essential product information such as articles, POs, customer orders, and more, without having to log into, or import data from the ERP

The benefits don’t stop there. NYCE.LOGIC puts the power in your hands with:

Unique customer flows that can be set up without the need for costly customization
An open architecture that integrates quickly with third-party solutions
Standard integrations, such as AutoStore, offered out-of-the-box
The fastest onboarding times in the industry

… and much more!

Digitally transform your warehouse

3PLs – it’s time to take stock. Now that you’ve discovered the 5 tech ‘pillars’ that support smooth warehouse operations, we recommend reviewing your current IT architecture to identify any red flags. Warehouse management and logistics are essentially one long and complex chain of activities, and any weak links must be addressed to thrive in today’s competitive retail environment.