How a modern 3PL WMS will supercharge your business

A modern, leading 3PL WMS is essential in running a successful logistics service provider company. To stay ahead of the competition, you need a system that can address your business requirements and meet all the challenges of modern 3PLs. Any system won’t do. This blog post will outline why, and how the right WMS will supercharge your business. We will also introduce our future-focused, flexible nyce.logic WMS, a system with many benefits for 3PL companies.

 

What is a 3PL warehouse management system (WMS)?

A 3PL WMS is a WMS that is specially designed for 3PL (Third-Party Logistics) companies. These types of platforms are developed to accommodate the specific needs of businesses in the industry. By selecting a specialized 3PL WMS rather than a general one, you will likely get access to functionality better matching your business needs.

The importance of 3PL services

3PL services are important for several reasons and have a lot to offer business partners. When utilizing a 3PL company’s expertise and technology, a business can focus on its core competencies instead. 3PL providers also enable businesses to scale up and down along with demand fluctuations.

Many types of companies benefit from 3PL services. Startups and SMEs can take advantage of their logistic expertise and infrastructure without major investments. E-commerce companies can deliver goods faster and improve their inventory management. Large enterprises can focus more on their core operations while outsourcing complex logistics functions.

Common challenges for 3PL providers lacking a good WMS

A 3PL provider without a quality WMS will likely struggle to keep up with the competition. Here are some of the reasons: 

• Lacking order fulfillment processes: manual or otherwise ineffective order processing has several downsides for a 3PL provider, its clients and the end customers. Errors, delays and poor inventory visibility can lead to decreased profits and dissatisfied business partners.
• Slow and error-prone billing: 3PL’s often have complex billing requirements. A company without a good WMS often experiences slow and error-prone billing, which can negatively impact profitability, client relationships, and operational efficiency.
• Poor customer service: today’s customers demand real-time updates on order status, which is hard to provide without integrated technology. Failing to deliver on customer expectations can lower customer satisfaction and damage your reputation. 
• Limited scalability: a growing business managing larger inventories will struggle to expand and adapt without modern, scalable technology

Key features of a 3PL WMS

A modern 3PL WMS offers broad functionality to take companies to the next level. Here are some of the most important aspects:

Multi-client management

Multi-client management is a cornerstone of a successful 3PL business. 3PL’s must be able to handle multiple clients simultaneously, each with unique requirements, priorities, processes and complexities. Tailored workflows and digitally separating client inventories within the same warehouse is a must. The WMS needs to do this efficiently, including inventory tracking, order management, billing, and reporting.

Inventory management and real-time reporting

Real-time inventory management tracking is essential in running an effective modern warehouse, especially a 3PL one. Real-time visibility allows warehouse managers and the client to get live updates, e.g. in the form of client-specific dashboards. This offers up-to-date business insights and improves the service level towards the client. It can also save on operational resources, as customers get access to their orders and stock availability. They will not have to reach out to customer service or helpdesk for status updates.

3PLs handle a high volume of SKUs from diverse clients, often requiring unique storage and handling processes. Advanced WMS use techniques like dynamic slotting, automated identification technologies (e.g. barcodes or RFID), Dangerous Goods settings, segregation rules or priorities and rules-based storage to efficiently handle SKU diversity.

Order management

3PL clients often have different order fulfillment rules, service-level agreements (SLAs), and product types. A quality WMS can support multi-client order processing, enabling separate workflows for each client while maintaining centralized control.

A 3PL WMS can define client-specific workflows. Quality WMS offer VAL or VAS (value-added logistics/services) functionality, where users are guided through the process. After confirmation, the VAL/VAS activity is logged and will appear on the invoice. Some examples of these functionalities are kitting, bundling, and custom labeling, capable of satisfying complex order requirements. The WMS will guide, register, and log activities, but also report on these services, so they also get invoiced.

The scalability of a modern WMS can also help to handle order volume fluctuations. Access to early insights makes it easier to anticipate the workload and plan accordingly. 

Billing and invoice automation

As previously discussed, 3PL companies need to have state-of-the-art billing technology to meet complex requirements. Automatically calculating, generating, and sending invoices based on predefined rules, client contracts, recorded activities, and storage ensures accuracy, transparency, and efficiency in financial transactions between the 3PL provider and its clients.

A 3PL WMS supports customizable billing rules for each client, ensuring accurate tracking of chargeable activities based on their specific requirements. As operations are carried out, the WMS automatically logs relevant data, which can then be exported to a billing system to generate detailed and accurate invoices. This ensures transparency and efficiency in the invoicing process without duplicating functionality already handled by financial systems.

A 3PL WMS supports customizable billing rules for each client, ensuring accurate invoicing tailored to their specific requirements. The WMS can, in many instances, automatically log activities as they occur, creating proforma invoices and preliminary documents outlining the details of a proposed transaction.

In the next step, they can be added to the finance system, eliminating manual data entry (if the system is integrated or if the information is automatically exported and uploaded to the other system). Many systems can also calculate storage charges dynamically based on real-time inventory data and predefined rates.

Integration capabilities

Integrations are essential in a 3PL WMS, as clients use many different business platforms and receive orders from multiple sales channels. A quality WMS supports a wide range of integrations through APIs, EDI, or pre-built connectors, allowing seamless data exchange with each client’s technology, such as ERP systems or webshops. It also integrates with MES (manufacturing execution system) and PIM (product information management) systems, marketplaces, e-commerce platforms, and omnichannel systems.

The integrations allow you to import sales orders and purchase orders into the ERP, later exporting the finished orders back to the WMS to sync stocks. It will give you a broad, updated overview. 

WMS can also connect to specialized shipping portals or carrier platforms to coordinate with multiple shipping carriers, compare rates, generate shipping labels, and track shipments. Information can be traced back to the WMS, saving time and minimizing manual work. 

Webshop owners can have their track and trace information communicated back to the OMS and webshop, giving customers access to their order statuses, including track and trace links. These integrations improve the service level and transparency, leading to higher customer satisfaction.
 

Scalability

A growing 3PL has a lot to gain by having a scalable WMS that can handle seasonal spikes, dynamically advising on allocating resources like labor, space, and system processing capacity to handle peak volumes. Simply put, having a readily scalable WMS future-proofs your business. No need for costly upgrades or major IT projects to handle increasing volumes or seasonal variations.

Selecting the right 3PL WMS

There are many 3PL WMS on the market. Make sure to compare different options and match them to your business requirements. As mentioned, it is also important to find a future-proof system that can accommodate your expansion plans to avoid costly upgrades or other surprises later on.

Here are some important things to consider:

• Core functionality: make sure that the WMS offers solid core functionality in areas like inventory management, order fulfillment, multi-client management, VAL activities registration, and billing 
• Client properties: consider your clients, their products, and their specific requirements. For example, a fresh food wholesaler that manages things like best-before dates, quality assurance on deliveries/batches, batch numbers, and traceability has different requirements than an electronics webshop that manages serial number registration and needs reverse logistics functionality
• Types of services: the WMS needs to support the specific logistics services you provide, such as order fulfillment, kitting, or cross-docking
• Industry-specific requirements: look for features tailored to your industry, e.g., cold storage, compliance with dangerous goods and hazardous materials regulations
• Volume and scalability: assess whether the WMS can handle your current order volume and scale as your business grows (include your future plans in this consideration)
• Ease of use combined with sophistication: select a system that combines broad functionality and ease of use. Broad functionality is important in improving operations, but employees should also be able to learn it and use it quickly. Finding a balance is the best, and in some WMS’s you can also manage functionality and usability by setting roles and authorizations, limiting the system’s scope for some users.
• Integration and customization requirements: can the WMS be effectively integrated and customized based on your unique needs? What might your business require in the future? 
• Automation capabilities: warehouses become more and more automated. How does the WMS handle that? Can it integrate and communicate with automation and robotics in an effective way? Consider automation technology such as vertical lifts, conveyor belts, shuttle systems, and picking robots 

nyce.logic - a market-leading WMS for 3PL companies

Are you looking for a 3PL WMS to grow and effectivize your business? Support your customers, maximize productivity and enable future success. Discover more about our future-focused, flexible nyce.logic WMS can do for 3PL companies.