With the third-party logistics (3PL) industry continuing to grow and dealing with an ongoing labor shortage, now is the perfect time to become a tech-enabled 3PL warehouse. 3PLs that manage growing order volume with manual processes–especially with a depleted workforce–are outdated, error-prone, and reduce process efficiency. Not to mention, customer expectations of their 3PLs are growing with many customers expecting technology that offers visibility into inventory management and integrations for ecommerce. Becoming a tech-enabled 3PL allows companies to stay relevant as a third-party logistics provider and not only retain but attract new customers. But, knowing where to start can be daunting.
When becoming a tech-enabled 3PL, automation is the name of the game. Automation refers to eliminating manual processes with software and/or hardware to reduce human error, inconsistencies, and slow speeds of handling repetitive tasks. It should be the main goal of any 3PL looking to adopt new technology. Although automation conjures images of robots, both physical and digital automation exists in a warehouse. Becoming a tech-enabled 3PL should start with digital automation, specifically with warehouse management system (WMS) software.
WMS as a Technology Foundation
A warehouse management system manages all day-to-day operations within a warehouse and acts as the foundation of any technology stack implemented by a 3PL. WMS functionality includes:
- Real-time inventory management, including automated cycle counting, auditing, and tracking of goods within the warehouse
- Receipts with the option to receive against advance shipping notice (ASN)
- Location management with directed putaway
- Picking and packing with mobile barcode scanning options
- Automated billing and integrations with accounting software
- Orders and shipping with built-in carrier information and label creation capabilities
- Integration with electronic data interchange (EDI), application programming interface (API), and online shopping carts
- Customer management if your warehouse services multiple customers, including the option to enable a customer portal
Let’s take a closer look at how a WMS automates billing functionality. As the warehouse operator performs transactions in the software, the WMS captures all billable events and invoices them per customer. Additionally, the WMS automatically calculates recurring storage, shipping, and receiving charges based on a timeline created by the warehouse operator (e.g. monthly, weekly, daily) and creates invoices for these charges. Then, at the end of the billing period, all the warehouse operator must do is export the invoices for each customer to an integrated accounting software like QuickBooks, significantly reducing billing time and increasing accuracy.
Often used as a powerful standalone tool, a WMS creates repeatable workflows that can apply to every customer for every type of transaction in a warehouse. However, a WMS can work with other software offerings like an inventory management system (IMS), order management system (OMS), enterprise resource planning (ERP), warehouse control system (WCS), warehouse execution system (WES), and more in an advanced technology stack.
But don’t get overwhelmed by the software options available! WMS is the right place to start, having ranked as the most implemented technology for 3PLs at 84% per the 2021 3PL Warehouse Benchmark Report. The 2022 State of the Third-Party Logistics Industry Report confirms that turning to “WMS technology isn’t new or a surprise for those looking to enhance operational prowess,” as WMS software drives efficiency, reduces dependency on manual labor, and allows for order volume growth.
Hardware as a Technological Complement
Once your 3PL adopts the right WMS software, the next step to becoming a tech-enabled 3PL is to invest in hardware that can work with your software. This doesn’t have to include major additions like robotics and automated guided vehicles (AGVs); instead, leverage radio frequency (RF) scanners or other mobile barcode scanning technology that works with your WMS to improve accuracy in different warehousing functions.
Mobile barcode scanning helps increase efficiency and accuracy in processes like receiving, picking, and packing that software alone cannot fully automate. Mobile scanning can verify the quantity and quality of incoming inventory receipts; confirm the correct serial number, SKU, and quantity at pick time; and select packaging types during order processing to ensure shipments go out in the right boxes or envelopes for the selected carrier service level. Partnered with a WMS, mobile barcode scanning technology eliminates human error by digitally double-checking information provided by the WMS at a faster pace than any human being could.
Once you’ve branched out into the internet of things (IoT) with mobile barcode scanning, then you can look into technologies like voice automated picking, pick-to-light, put-to-light, and AGVs to further automate your processes and improve efficiency. IoT is set to be a major player in the 3PL space with 69% of 3PLs looking to invest in IoT technology, and you won’t want to fall behind the competition.
Learn More about Warehouse Technology Trends
For more technology trends, download the 2022 State of the Third-Party Logistics Industry Report.