Running a warehouse means no two days are the same. A 3PL constantly juggles dozens of clients, each with its own products, rules, and service agreements. A 3PL Warehouse Management System (WMS) brings order to that complexity by unifying operations, tracking inventory, automating critical tasks, and keeping warehouse teams and clients in sync.
Built specifically for multi-client environments, a 3PL WMS enables a 3PL to:
Our 2024 Third-Party Logistics Warehouse Benchmark Report, which surveyed 200 3PL operators across North America, the UK, Australia, and New Zealand, reveals the critical challenges defining today’s 3PL landscape. We found a slow order volume and profitability, persistent labor shortages, and revenue drain from missed charges and manual billing. Technology gaps and fragmented systems often compound these issues, stressing operational efficiency and profitability. In response, a dedicated 3PL WMS emerges as a clear opportunity. 70% of companies experienced increased order volumes after implementing a 3PL WMS, and 69% saved over 10 working hours monthly through automation.
For warehouses still managing with Excel or homegrown tools, a 3PL WMS delivers immediate and substantial benefits: enhanced real-time visibility, streamlined task and order routing across locations, maximized revenue capture, expanded client capacity, and a single source of truth for all operations.
Every new client brings a unique set of demands to their 3PL: custom SKU catalogs, new handling requirements, different billing models, and unique SLAs. While many 3PLs initially try to manage this manually, it simply doesn't scale.
Without a WMS built to handle multiple clients, you’ll likely encounter significant issues. These range from broader industry trends to specific findings in our 2024 Third-Party Logistics Warehouse Benchmark Report including:
Inventory accuracy suffers significantly without a robust WMS. While high-performing warehouses achieve 95%+ accuracy, less optimized operations can see rates drop to 67% (CAPS Research via Inside Supply Management). This lack of precision directly impacts client satisfaction because product locations become uncertain, leading to issues like costly stockouts or overstocking. Low inventory accuracy also fuels broader inventory shrinkage – projected to reach $132 billion globally in 2024 (Capital One via National Retail Federation) – through frequent miscounts, process inefficiencies, and reporting errors.
Fulfilling demands is increasing. While 70% of 3PLs fulfill and ship orders under 90 minutes, that speed is becoming standard. Meeting the next level of expectations hinges on having inventory close to the customer and processes that can react in real time.
Growth slows down. In 2024, 18% of 3PLs saw order volume drop year over year, usually tied to visibility issues, inefficiencies, or losing clients they couldn’t scale with. Without a WMS, these issues are compounded as process inefficiencies slow fulfillment, decrease reporting capabilities and visibility, and limit client growth.
Charges get missed. 56% of 3PLs say they are leaving money on the table by being unable to automate billing for their value-added services. Things like relabeling or overages often slip through when teams log them manually.
Billing takes up time. Over half of 3PLs spend over 16 hours a month just on billing. Only 24% keep it under 8, and those are 2.8x more likely to be highly profitable.
Tech gaps slow everything down. Without direct integrations to order management systems (OMS) or shopping carts, 3PLs fall back on matching inventory across tools, working around slower order turnaround, and operating with limited visibility into fulfillment.
For 3PLs, a Warehouse Management System (WMS) is far more than a modern upgrade. It fundamentally solves core operational challenges stemming from manual or outdated processes, empowering 3PLs to overcome daily inefficiencies and secure long-term scalability. In the same benchmark report, we asked 3PLs what their strategic priorities driving WMS implementation were:
Real-time visibility is the top driver. 87% of 3PLs said up-to-date inventory tracking and management was their top reason for adopting WMS.
Efficiency and automation are primary motivators. 75% also cited day-to-day operational gains, and we can see why—69% of our small to medium 3PLs surveyed saved over 10 labor hours monthly through automation alone, most saved between 11-25 hours.
As 3PLs work to simplify their operations, many weigh a full ERP against a WMS. While ERPs serve broader enterprise needs, a WMS gives warehouse teams the control to manage daily warehouse activities. It’s faster to roll out, easier to adopt, and better suited to fulfillment demands.
Billing and reporting need to scale with the business. 54% prioritized automated billing (up from 47% in 2023), and 67% cited stronger reporting, shifting from basic visibility to proactive insight.
Cost pressures are influencing adoption. As margins tighten and complexity rises, 28% adopted a WMS with cost-cutting in mind, up from 21%.
Growth follows when systems align. 70% of 3PLs saw order volume grow post-WMS implementation and 21% grew more than 50%. Those with shopping cart integrations were 1.8x more likely to report high growth, and 56% saw strong profitability. Having a 3PL WMS supports growth and customer retention, especially when used by 3PLs in conjunction with other crucial integrations.
A 3PL WMS is the operational backbone for most 3PL warehouse managers striving for true efficiency. Beyond basic tracking, it provides real-time control and optimizes daily operations, from labor and space utilization to precise client fulfillment. The result: significant cost reductions, enhanced client satisfaction, and truly scalable growth, all driven by seamless integration and actionable data insights.
To truly optimize your 3PL warehouse, a WMS must provide robust, end-to-end management capabilities. As you evaluate systems, prioritizing their core feature set is paramount, for these capabilities directly determine how effectively they can manage your complex operations. WMS essential features should include:
This feature provides granular visibility across every level: pallet, case, and individual unit, within all storage zones, including pick, reserve, returns, or on-hold areas. A robust WMS should instantly update location data with every movement and support advanced methodologies like FIFO (First-In, First-Out), lot tracking, and license plating, where precise material handling and traceability are required.
This critical feature ensures every billable activity that adds cost, such as receiving, kitting, relabeling, storage, or specific pick fees, is automatically tied to the correct client and logged in real-time. The system should apply the correct charges based on pre-configured rate cards and auto-generate invoices, eliminating the reliance on manual notes, clipboards, or spreadsheet backups that often lead to missed revenue.
Most WMS will come with standard dashboards, but some will include advanced reporting capabilities designed to identify and flag operational anomalies before they escalate. This means actively flagging mispicks, missed scans, slowdowns in specific zones, or recurring exceptions, allowing management to pinpoint and fix process inefficiencies and maintain adherence to SLAs.
Advanced labor analytics capabilities allow warehouse operators to see exactly where team members might be encountering friction, whether it's skipped packing steps, decreasing or consistently low lines per hour (LPH), frequent scanning errors, or task assignments backing up in a specific zone. This enables them to quickly shift resources and optimize workflow on the fly.
Most 3PL warehouses struggle with hiring and retaining their warehouse staff, so decreasing training time and increasing technology adoption within your facility will help you maximize your staff's efficiency.
When investigating warehouse management technology, 3PLs often consider an Enterprise Resource Planning (ERP) system instead of, or in addition to, a WMS. ERPs are a much more complex system that manages multiple functions across your business, including finance, sales, and simple supply chain management. If you are looking for a system that excels in broader business management, an ERP may be a good choice. ERP systems are generally much more expensive, highly complex, and slow to implement due to the many functions that need to be onboarded. Importantly, ERPs are not dedicated to warehouse management, so they will not have the operational vigor that a dedicated WMS has, including knowledgeable support, real-time visibility into inventory, custom of complex warehouse workflows, detailed warehouse efficiency reporting, etc.
Another option 3PLs may consider is an entry-level WMS, which will provide quick, cost-effective, and straightforward inventory management. Yet, these systems frequently lack the specialized capabilities scaling 3PLs require, such as dedicated support, robust integrations (like EDI/API), customizable processes, advanced reporting, true scalability, or client portals.
Neither ERP nor Entry-level WMS fully addresses the comprehensive needs of a growing 3PL. This is precisely where a dedicated 3PL WMS like Extensiv 3PL Warehouse Manager fills the gap. It combines the ease of use and rapid setup of simpler systems with the powerful, specialized features 3PLs truly need, including robust integrations, advanced reporting, scalability, and essential client communication tools.
To evaluate a WMS for your 3PL, focus vendor discussions on key areas central to your unique operations and growth strategy. These questions will help you determine if a WMS offers the necessary capabilities and if the provider is the ideal partner:
How does the system effectively manage a volume spike from one of my customers?
What specific charges will the system capture automatically?
Are there any limits on the number of SKUs, customers, or zones I can have within my WMS instance?
What can my warehouse operations team adjust or configure in the system, and what will require IT team involvement?
What other 3PLs are currently using this system?
What are your standard SLAs?
What does the onboarding process for a new customer typically look like for us?
When do you realistically expect us to see ROI?
How easily does the WMS integrate with our other core systems, like our customers’ shopping carts or accounting software?
Can we easily create and customize specific reports for individual clients or internal operational analysis?
What kind of ongoing training and support do you provide for our team after the initial implementation?
What are your data security protocols to protect our clients' sensitive information within the system?
By asking these questions, you can move past surface-level features and evaluate whether the system and the WMS provider can truly support your long-term growth. It's also important to understand the implementation process for your specific warehouse setup, because even the best features won't matter if your team struggles to adopt them.
A cloud-based WMS is managed entirely by the provider and offers remote access without requiring your servers or IT overhead. Conversely, an on-premise WMS runs on your servers. It provides complete control but makes your organization solely responsible for hardware, updates, and IT support.
Both models have distinct advantages and trade-offs. The ideal choice ultimately depends on your operational needs, existing IT infrastructure, and long-term strategy.
Clients expect a faster turnaround, global disruptions are more common, and experienced warehouse staff are harder to find. Meanwhile, 3PLs must manage diverse client needs, often with limited resources. These mounting pressures drive more 3PLs to adopt cloud-based WMS solutions that offer flexibility, automation, and real-time visibility essential for sustained operations. Here’s why the cloud is becoming the preferred choice:
Category |
Cloud-Based WMS |
On-Premise WMS |
| Deployment Time |
Faster setup, implemented remotely |
Longer setup, requires significant on-site implementation |
| IT Support |
Handled and supported by provider (SaaS model) |
Requires dedicated internal IT team and infrastructure management |
| Update Cycle |
Automatic, real-time updates pushed by provider. Provider sets downtime (usually described in an MSA) |
Manual updates, scheduled by internal teams, may require downtime |
| Maintenance |
Included with subscription, managed by provider |
Handled in-house |
| Scalability |
Most cloud-based systems prioritize flexibility and won’t need additional IT support or servers to scale clients and locations |
Scalability limited by internal hardware and infrastructure capacity, but the system could be customized fully for complex need |
| Accessibility |
Accessible from any company approved, internet-connected device |
Access typically limited to internal network or specific on-site connections |
| Security |
Provider-managed infrastructure, generally with robust backups and security via cloud infrastructure |
Locally controlled data, can be highly secure if properly managed and maintained internally |
| Cost structure |
Predictable subscription, minimal upfront costs |
High initial costs, ongoing expenses for licenses, upgrades, and IT support |
Considering these significant advantages, it's clear why more 3PLs are strategically choosing cloud WMS solutions. It enables quicker implementation, streamlined updates and scalable operations without costly infrastructure rebuilds. Moreover, its seamless system integration with essential business tools like storefronts, shipping partners, and accounting systems via APIs and pre-built connectors results in improved data accuracy, efficiency, and enhanced customer experience.
Want a complete breakdown? Read our guide: 3PL Warehouse Management: On-Premises vs Cloud-Based – Which Is Right for You?
Tech Readiness: What Needs to Be in Place
Before you roll out a new WMS, it’s worth making sure a few key pieces are in place. Without this groundwork, even the best system won’t be able to perform as expected, and your team may end up spending time patching gaps the software was meant to solve.
Clean inventory records, including accurate item names, barcodes, and warehouse locations
Clearly defined client rules: SKU details, storage locations, billing rules (rate sheets and charge triggers), and handling exceptions
Accurate warehouse slotting, zoning, and dock-to-stock flows
Confirmed device and network setup: scanners, tablets, label printers, and robust WiFi coverage
No matter how robust a WMS is, it can easily fall short if the setup lacks proper planning or careful execution. Some of the most common issues include:
Skipping prep steps like barcode cleanup, updated maps, or billing logic
Underestimating how much training is needed for the warehouse and administrative teams
Failing to test edge cases or real order flows before going live
Not assigning clear owners for setup tasks and decisions
Choosing a system that doesn’t fit your business needs
Over-customizing too early
Teams that plan, keep things simple at the start, and stay connected to day-to-day warehouse operations tend to have smoother system implementations and get more value from their WMS over time.
For a WMS to deliver real value, your team needs to be fully prepared to use it in day-to-day operations. Effective training should be hands-on, role-specific, and timed well ahead of go-live. Here’s how to approach it:
Start with hands-on practice: Give your team time with the system well before going live. Early exposure builds familiarity, reduces hesitation, and helps them catch issues before they impact live operations.
Tailor training by role: Each team interacts with the WMS differently, so training should reflect that. Receivers need to focus on inbound scanning and putaway steps, while billing staff should understand how charges are triggered and tracked.
Build comfort with the tools: Not everyone is comfortable with scanners, tablets, or warehouse apps. Make time early for basic drills such as navigating menus, scanning SKUs, and entering data, so the tools feel familiar before real orders start moving through.
Train early and reinforce often: Start a few weeks early. Space training out and reinforce it with short refreshers. Keep support open after launch, as most issues don’t show up until the system is live.
No WMS will deliver to its full potential if your team lacks confidence in using it. Training your team enables them to move quickly, correct issues efficiently, and maintain accuracy when operations are demanding.
How Extensiv 3PL Warehouse Manager Works
3PL warehouses are under pressure to grow while staying efficient. That’s hard to do with outdated systems that create manual work, inventory gaps, and billing issues.
Extensiv 3PL Warehouse Manager lets you oversee more orders, create and manage unique workflows, and grow your orders by more than 22% in the first year. At Extensiv, we provide proven cloud-based WMS technology that is the backbone for your 3PL business. It can transform paper-based, error-prone businesses into highly competitive industry leaders.
With Extensiv 3PL Warehouse Manager, you get complete visibility and control:
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Contact Extensiv today to request a free demo.
Rocket Shippers was juggling manual steps and disconnected systems across clients. By pairing a 3PL grade WMS – Extensiv 3PL Warehouse Manager and Extensiv Network Manager, they cut down on busywork, streamlined order routing, and grew order volume by 28% in one year. It’s proof that the right setup does more than keep things running.
Read their full story here.
In today’s increasingly complex logistics landscape, 3PLs are expected to operate with greater speed, accuracy, and adaptability, often across multiple clients and locations. As operational pressure mounts and fulfillment grows more nuanced, the need for a system built specifically for 3PLs becomes clear. A 3PL WMS provides the structure to manage complexity precisely while giving leadership the visibility and control required to scale effectively. Rather than a simple software upgrade, it becomes a strategic foundation that enables stronger service levels, tighter cost control, and the ability to meet shifting demands confidently.
For warehouse owners evaluating how to strengthen their 3PL operations and prepare for long term growth, a 3PL Warehouse Management System is worth a closer look.