From parcel to pallet: How 3PLs can utilize a WMS to log value-added services and boost margins

Understand why 3PLs are struggling with low margins
Discover the importance of logging and capturing value-added services
Learn why a Warehouse Management System (WMS) is the key to flexible pricing and a healthy bottom line
Extra resources: explore the tech tools designed for 3PLs

Growth and complexity in the 3PL marketplace

The global Third-Party Logistics (3PL) market has doubled in size since 2016 and was recently valued at a staggering $1.47 trillion(1). Operating as a profitable 3PL now means responding to omnichannel shopping behaviors; managing complex, global supply chains; and adapting to meet the needs of digitally-native, discerning consumers.

Amidst this turbulent environment, 3PLs face unique challenges in their day-to-day operations. Staff are spending too much time managing complex digital systems, instead of fulfilling orders. Adding new clients to a warehouse is a slow process, often requiring fiddly integrations with their existing IT architecture. Compliance breaches are a serious concern for senior staff, with high-risk items needing to be safely stored, handled, and moved.

Unsurprisingly, in such a busy and demanding environment, many value-added activities aren’t tracked or digitized, resulting in a huge missed opportunity for 3PLs.

Luckily, there are simple changes your business can make to enable flawless operations and boost margins. Keep reading to discover how to power value-added services: all the way from parcel to pallet.

The services that boost profits for 3PLs

Depending on a customer’s product offering and infrastructure, 3PLs will usually offer them a combination of warehouse management, transportation management, and value-added services. In fact, 3PLs provide an average of 3 services per customer relationship(2).

Offering additional services can be a great way for 3PLs to manage logistics tasks that their customers see as a nuisance, and therefore maximize profits. Unfortunately, many 3PLs are manually tracking these value-added activities, meaning that they are not billed to the customer. If 3PLs can’t digitize and monitor all of the value-added services going on in the warehouse, they’re adding unnecessary workload to their already stretched staff, and are missing an opportunity to boost their bottom line.

"3PL providers who have traditionally built their business on providing warehousing and logistics services are now looking to position themselves as more agile and strategic suppliers by offering value-added services (VAS) under one roof." - Adrian Gonzalez for Talking Logistics(3)

Adding value: Services to boost margins for 3PLs

There are a range of services that 3PLs can offer as a bolt-on to their customers. Generally, these can be grouped into three areas: pick and pack, transit, and aftercare (or post-delivery). Take a look at the checklist below and make a note of how many of these value-added services your business currently offers:

Pick and pack

Labeling
Bespoke packaging (e.g. personalized items or sustainable materials)
Kitting (assembling different items into ready-to-deliver kits or sets)
Recurring subscriptions which must adhere to strict shipment deadlines
Inserting marketing materials
Quality control and assurance

Transit

Storing and moving difficult items (such as oversized or hazardous goods)
Negotiating better shipping rates

Aftercare / post-delivery

Processing product returns
Communicating with customers
Shipping and receiving unwanted products at the fulfillment center or warehouse
Sorting and evaluating the returned items to determine if they should be restocked, recycled, or disposed of

WMS: Orchestrating value-added services for 3PLs

We’ve covered what value-added services you can offer your customers. But as we learned earlier, ensuring they’re tracked and managed makes a real difference to your bottom line.

Luckily, there’s one simple and powerful IT solution that can digitize your processes. A Warehouse Management System (WMS) acts as a central repository for all services. Any action taken with a product is captured in the WMS, and displayed to staff in real-time. This ensures that pricing is accurate, and all services have been accounted (and charged) for.

A modern, intuitive, and user-friendly WMS is a must for 3PLs wanting to boost employee satisfaction, smooth operations and maintain healthy margins.

"Those who are too slow to act in adopting the right WMS will be left behind. A cloud-native WMS has the expertise to rise to these challenges, now and in the future, and will become an integral partner to deliver business success." - Jesper Rune, Client Executive at NYCE.LOGIC(4)

Ready for flawless warehouse operations?

82% of supply chain executives described value-added services as either “important” or “very important” for delivering their growth strategy(5). 3PLs have an unmissable opportunity to set themselves apart from the competition and delight customers by offering a range of value-added services. However, it could be a costly mistake to roll out these services, but fail to track what’s been completed, and what exactly needs to be charged for.

Ready to step into the future of warehousing and logistics? Discover more about the market-leading WMS from Extenda Retail.