Complete Guide for 3PLs Adopting Warehouse Management Software
3PL warehouses are growing rapidly. Competition has never been stiffer. Isn’t it time to add new warehouse management system (WMS) technology to meet the current and future challenges?
Adding new technology to any business is challenging. It’s not a new phenomenon. In the classic movie City Slickers from the 1990s, actors Billy Crystal and Daniel Stern debate the difficulty involved in setting the time on a VCR—why does it continue to flash 12:00? We have come a long way from those early days. Technology feels like it's running at warp speed, and many believe they are being left behind.
The clock just continues flashing 12:00 for many of us. The fast-changing world of third-party logistics (3PL) warehouses are no different. Many 3PL warehouses rely on tech software like Excel, paper filing, and even VCRs–yes, they are relying on relics (so-called tech dinosaurs).
At least 70% of 3PL companies are using extremely limited and obsolete warehousing software or paper-based filing to operate their warehouses. A study published in 2019 by Kenco and Logistics Management stated, “supply chain leaders are showing a greater willingness to take a risk on new technologies, as 46% of respondents say they are willing to spend 10-24% more on innovation—up from 24% in 2018 and 29% in 2017.”
Companies who rely on manual processes during fulfillment have the potential to make enormous gains by accepting the latest warehousing technologies. However, they will need to embrace the ever-changing system and start immediately adopting innovative warehousing software. If they fail to move forward, they risk being left behind by more innovative 3PLs who have the potential for greater success.
As a 3PL warehouse, your customers depend on your company to fulfill customer orders efficiently, accurately, and in a timely manner. To remain competitive and successful, you must keep your customers and their consumers happy or risk losing them. You’ll need to stand out from other 3PLs with the services that you provide.
3PL warehouses fulfill orders in a multistage process. From the moment an order is placed, to picking, packing, and shipping, customer notifications, and inventory reporting, the process sounds fairly straightforward, but it's not always easy. You have your customers depending on you, coupled with the buyer’s journey, and all of it adds up to a huge amount of data that requires management. Warehouse management system software becomes a lifesaver in such circumstances.
What is WMS?
WMS stands for warehouse management system. It is fulfillment software that helps a 3PL warehouse function. The software solution provides visibility into a warehouse’s day-to-day operations and manages the complete supply chain fulfillment workflow process from the inventory management, fulfillment services, billing, data management, integrations, and more.
With warehouse management software, companies maximize their labor and space by coordinating and optimizing their resource usage and material flows. WMS software helps 3PLs support the needs of the entire global supply chain.
With a dynamic omnichannel fulfillment software, a 3PL warehouse can manage the supply chain, inventory management, and fulfillment services to align and streamline all functions.
Types of 3PL Software
Prior to the internet, 3PL warehouses relied on manually fulfilling and processing all orders. Each part of the supply chain operated independently, and many errors occurred. Luckily, modern technology has streamlined the entire logistics process with automation and software. The goal is to always reduce potential errors, ease the workload, and alleviate headaches.
The most common types of 3PL software used are:
- Stand-alone warehouse management systems
- Integrated supply chain management (SCM) suites
- Enterprise resource planning (ERP) systems
Standalone Warehouse Management Systems
Standalone warehouse management systems increase the productivity and efficiency of warehouse operations. WMS software streamlines the fulfillment process by tracking everything from goods received to fulfillment of orders and shipping. WMS software is also used to manage billing, labor, integrations, and additional reporting.
Integrated SCM Suites
The supply chain starts with product development and finalizes with shipping the product to the customer. The activities of the supply chain such as production, inventory, warehouse management and shipping are all part of the supply chain management system, which is a collection of software that handles the entire process. It effectively keeps track of data, financial assets, and goods as they transition throughout the supply chain.
The ERP system integrates all of the processes of running a warehouse. It spans inventory account software, customer service, and more. An ERP system functions through a shared database that lets employees in other divisions of the company gain access to data. Reporting and automation are also used with this system.
Considerations When Picking 3PL Software
If you are operating a 3PL warehouse, then you’re looking for tips on how to pick software specifically for 3PLs, especially if you are currently relying on manual processing or outdated software systems.
Things to look for when choosing 3PL-specific software:
- Scalable Functionality: You want your business to continue growing so you’ll want to pick a warehouse management system that meets your evolving needs. You don’t want to invest and not have any room for expansion.
- Innovative Technology: Pick a software program that you trust—you want to invest in the best technology to meet your 3PL needs.
- Labeling Compliance: There are regulatory requirements involved in the processing and labeling of packages. A 3PL provider knows and understands the requirements. With software, you can effectively function and meet those needs.
- Billing: If you have been operating your 3PL manually then, sadly, you are familiar with misplaced invoices and other problems. However, billing functions that are included with 3PL solutions helps you ensure that all storage, receiving, shipping, and billing are accurate and on-time.
Need more tips on what to ask when shopping for a WMS? Read: 5 Things Every 3PL Should Ask Their WMS Provider
Picking Extensiv 3PL Warehouse Manager
A WMS with the above features will meet your 3PL’s needs now and into the future. Extensiv 3PL Warehouse Manager WMS provides necessary and functional change to warehouses looking to use our expertise and experience. Extensiv has used our access to hundreds of 3PLs and WMS users to design software using best practices to manage workflows to simplify the functions of your warehouse and create easier processes for your staff.
One example where our software stands out is in receiving inventory. If your technology or lack of it does not allow you to effectively receive inventory without an advance notice or expectation of inventory included within the delivery, then your logistics functions become seriously impacted. In such situations, a human must count and keep track of all critical tracks by serial numbers, lot numbers, and more by writing it all down or typing it into spreadsheets.
Extensiv 3PL Warehouse Manager can quickly scan barcodes with a mobile scanning device integrated into the WMS to tell the warehouse receiver where to store the inventory, which location is the most efficient, and then automatically accounts for the inventory. Such changes enhance efficiency but often require changes in how the warehouse operates.
Invest in Training
It’s easy to focus on updating your 3PL software and overlook the need to invest in training for your workers. You’ll need to take the time to ensure that each one of your warehouse employees has the necessary training so they can handle their role in the supply chain and keep the workflow chugging along. Each role should be handled in the most efficient and easiest way possible to ensure effectiveness.
Your 3PL’s efficiency gains depend on fully leveraging, along with adopting, all best practice workflows.
Many warehouse workers are not fully versed in the common technology leveraged in a warehouse environment. They might not be familiar with the functionality of laptops, tablets, mobile scanning devices, and more. Running effective training problems helps ensure the successful adoption of all technologies that are needed for the function of overall warehouse solutions.
Ensure Technology is Supported
According to the Logistics Management report listed above, the second “biggest barrier to supply chain digital transformation” was the inability to understand the importance of digital technologies and their impact on the business.
A cloud-based WMS features increased uptime, speed to access data from anywhere, and scalability via integrations to ensure complete visibility, security, and reliability. When moving to the cloud, warehouses will be able to access technology to help them operate consistently and efficiently. Investing in a warehouse management system might also include the following:
- Barcode scanners
- Shopping cart connections
- Integrations with data sources, laptop, tablets, and other devices
If you have only part of a solution available, then you can experience a severe disruption in warehouse operations.
Benefits of a Cloud-Based WMS
The internet and digital technologies have transformed how things are purchased. Any disruption in the supply market can change a consumer’s buying patterns and create complexity in the supply chain. Fulfillment operations need to change with digital solutions to meet the evolving needs. Moving to the cloud, warehouse management systems stay connected with the consumers using connected fulfillment solutions, marketplaces, and shopping carts that provide real-time visibility, market reactivity, and scalability.
Quick WMS Implementation
A thriving 3PL must remain competitive, especially in this economy when competition is even more intense. You have to adapt your business quickly. A cloud-based system helps you ramp up the speed of your supply chain.
Powerful logistic capabilities become available in weeks instead of months as systems are regularly supported. You have the same level of warehouse functionality as an on-premises system but without the high IT overhead.
Cloud technology quickly eliminates the need to pay for IT specialists to maintain an onsite system. With a cloud-based WMS, you’re up and running in no time at an affordable price.
Cloud-Based WMS Requires No Upgrades
Cloud-based software provides an almost instant return on investment and is more affordable. You don’t have to worry about costly hardware, software, or IT specialists. The software is easy to integrate with multiple systems. The cloud WMS will connect your entire logistics processes end-to end.
A company that opts for an on-premises WMS often has to pay for customizations and modifications over the years. When it's time to upgrade, the company has to reinstall and configure everything which might require an IT specialist.
With a cloud-based WMS, you are not faced with paying for upgrades. Also, there is no additional IT infrastructure costs. Everything is completely installed, managed, and maintained by the software developer.
With a cloud-based WMS, your software is always the latest. You don't have to worry about updating. Everything is in the cloud and the updates work when needed so you don’t have to worry about it.
Scalability and Flexibility
Global logistics requires speed to meet the market demands. With a cloud WMS, you’ll have the scalability you need to expand your supply chain operations to meet the evolving needs of the market. You can scale as needed to better cope with peak season and manage other changes more efficiently. If a new opportunity should emerge, you are equipped to manage it. The business agility provided by a cloud-based WMS is ideal.
Yes, at Extensiv, we believe in seamless integrations. Our WMS solution is built for both pre-built or custom integrations so you can easily leverage everything needed for a fully automated warehouse.
Tips on Choosing WMS Software
Are you looking to upgrade or invest in a warehouse management system? You know that one of the main tips to stay ahead in the 3PL industry is to have a modern WMS to meet your needs. You’ll be able to improve order fulfillment, automate data collection, and boost inventory visibility. Let's take a few minutes to examine the steps needed to choose the best WMS so you can better optimize your warehouse operations.
Warehouse management software processes a staggering amount of data seamlessly and it also coordinates the movements of your warehouse. Those two components are the foundation of your business, so you want to make sure that the WMS you pick meets your needs. Can it produce reports? Manage large volumes of transactions?
- Efficient labor management
- Complete stock traceability and visibility
- Reduced number of picking errors
- Accurate inventory counts
- Remote data visibility
- Reduction in returns
- Minimized paperwork across all departments
- Improved customer service
- Automatic implementation
- Greater responsiveness
Remember, a WMS is not a quick fix to all of your business problems. It is an inventory control system and acts as a data collection tool and helps automate warehouse operations. Without a doubt, it is a justifiable and necessary tool needed by all 3PLs to stay competitive and function more efficiently.
Calculate Return on Investment (ROI)
You may need to justify the cost of the best WMS for your 3PL. Think about the functional must-haves versus the nice-to-haves when making a choice.
Consider the following:
- WMS provides improved stock accuracy while offering real-time information, reducing the incidences of errors, and enabling ongoing inventory counting
- Increased productivity
- Cost savings for labor, equipment, and space
- Improved traceability
- Greater warehouse control with improved pick and dispatch accuracy
- Better customer service
Think about your ROI. A large number of daily transactions such as picks and moves within locations in the warehouse give a greater ROI.
Take the time to outline all costs on a spreadsheet. Be sure to factor in costs like hardware and infrastructure so you can think about your budget and ROI. To help, check out the Warehouse Profitability Checklist.
Analyze Your Existing 3PL Systems
Do you already have a WMS? You might want to analyze it completely before you get rid of it and opt for another one. If you have been encountering a shortfall in functionality and other problems with your current system, then it might be time to try something new.
Do not hesitate to request information from WMS providers. At Extensiv, we are more than happy to discuss our cloud-based WMS platform. When you decide to partner with us, you’ll become one of a network of 12,000+ logistics professionals who use Extensiv 3PL Warehouse Manager to manage all of their logistics supply chain needs. We believe in supporting our customers wherever and however they need.
Adopting New 3PL Technology
When adopting new 3PL technology, you have to remember that your primary customer is always your customer, and their customer is the consumer. Making the shift from a private warehouse to a 3PL is scary for many businesses. They are now trusting another entity to function and manage their product, process, and consumers. As the owner of a 3PL, you have to be ready to meet their needs with the latest technology to oversee all steps with ease.
Your goal is to achieve customer retention and satisfaction. The key to doing that is to make sure that the warehouse customer and the consumer are both happy by providing a solid platform for your 3PL inventory management strategies. A WMS is a necessary component of the entire 3PL strategy. You must stay up to date on all technology to provide the best services possible and stay ahead of the competition.
Inventory Management for 3PL
As an owner or operator of a 3PL, you know the art and science of getting things from point A to point B. For an outsider looking in, the art of logistics might seem simple, but it actually encompasses many sub-disciplines and complexities. You are taxed with handling both logistics and inventory management.
Inventory management involves documenting all of the necessary steps to ensure that things run smoothly. Also, it involves constantly optimizing things to foresee the future. Most operators of a 3PL wish they had a crystal ball to foresee the future so they can better meet the needs and get ahead of things before they roll out.
You want to make employee picking patterns efficient. Automate data entry to avoid problems such as manual errors. Also, another component is being able to broaden freight options to offer the cheapest and most efficient solutions.
Your job involves putting every single component of the 3PL inventory management function under a microscope, examining all aspects and then figure out what you can do to make things better and more efficient. You can never drop the ball, or the competition will spring ahead and get the edge.
Having trustworthy and dedicated warehouse management software at your disposal is one of the best ways you can ensure the best inventory management for the present and future.
Why Embrace WMS Software?
Part of adopting recent technologies for your 3PL involves embracing WMS software. Clients are savvy and well-researched. Many won’t give you the time of day if you don’t use some sort of warehouse management software. You cannot juggle multiple clients and logistics operations without it. Your business will never grow if you do not have WMS.
Let’s look at a few benefits of WMS technology:
Nowadays, most warehouse management involves the use of automation. Being able to automatically aggregate reports saves you time. Avoiding manual data entry by using SKUs and barcodes created and collected within a single repository is also a crucial timesaver. Automating reorder points, syncing your software, and invoicing platforms is also a fantastic way to free up time and increase your productivity.
Visibility and Transparency
You want visibility internally and with your warehouse customers. You want them to know they are getting their money's worth when collaborating with you. A WMS gives you a complete inventory of on-hand or in-transit items in real time. You can generate reports and even pinpoint specific marketplaces and examine their performance. If a client needs info on certain returns, you can easily generate and send the data to them when they request it—or better yet, they can access reports with a dedicated customer portal. Visibility and transparency are huge assets for your clients and your business.
How many 3PL owners measure warehouse time in seconds and not minutes? Really, every second wasted ends up chipping away at your bottom line. This is especially true with shipping delays.
Delays also impact the trust that you have formed with your clients, especially if their consumers are unhappy with the service they have received.
WMS software can streamline and save time with features like automatic label printing, receiving, and mobile optimized pick lists.
Growing Your Business
Expanding your operations looks different for every 3PL provider. You might want to take on new clients, scale up your current clients with SKU count, or even expand the warehouse infrastructure. Having a solid WMS lets you grow your business in your own unique way.
As you strive to meet the needs of more clients, you’ll start to see that they each have their own set of distinctive needs. Some customers may need specific ecommerce requirements, pallet in/pallet out, cold storage, or maybe you want to optimize for omnichannel fulfillment. Some might need kitting and assembly. In such situations, a single fulfillment strategy won’t work for all clients. A WMS gives varying dynamics but should still allow you to utilize best practices regarding your fulfillment strategy.
Every 3PL wants to expand their bottom line—you’re in business to make money. The best way to increase profitability is through optimization processes, workflows, and all of your business behaviors.
Critical Features of 3PL Warehouse Management Software
Let’s take a few moments to examine critical features of 3PLs.
With 3PL warehouse management, the barcode is a leader. The cost-to-value ratio is not even a real consideration when it comes to a barcode system. Implementing an effective barcoding system is a necessity. It is not a luxury. Barcoding effectively mitigates human error so your warehouse operates better.
When dealing with multiple SKUs from a variety of clients, you’ll need a barcoding system on which you can depend. Also, you’ll start integrating essential information into the barcodes such as group numbers which are needed for LIFO and FIFO strategies—you have to be able to do all of this to function in the modern 3PL world.
Using a WMS, every barcode scan is logged into a repository. You do not need multiple databases or systems.
Reporting and Billing
3PL companies regularly bill their clients on a per pick basis or per order (this is in addition to baseline storage costs). You need 3PL billing software to meet your needs. The pricing structure necessities should be easy to access so you can pick data on a client-by-client basis. Prior to software, compiling invoices and manual number crushing took a huge amount of time but it can now be accomplished in minutes. Also, there is no fear of human error.
Adopting New Technology
The challenges of operating a highly competitive 3PL in today’s culture is extreme. Clients are always hunting for better service, more efficient logistics, and lower rates. If you don’t stay ahead with technology, then you risk losing out to your competitors. 3PL owners are always trying to make their company stand out to draw in new clients and retain established ones.
Running a paperless warehouse is not an option moving forward but a ‘must.’ As a 3PL owner or operator, you have to be willing to embrace technology so you can harness the potential gains to your corner.
Prepare for Change
A 3PL business does not have the luxury of reaching the end of their technology rope. You cannot just be happy with your logistics performance and stop trying to upgrade or expand. If so, you’ll fall behind and lose customers. You have to keep the ball rolling and stay up to date on the most innovative technologies that increase your fulfillment speed and provide you with efficient warehouse operation gains. You cannot resist change.
Collaborate with the Entire Network
You are not an island. As a logistics company, you function as a result of your customers and their consumers—not to mention answering to stakeholders, trading partners, suppliers, and others. You have to be open to collaboration with an ongoing willingness to share information with your partners. Keeping the lines of communication open will help you establish and retain your contracts. You’ll also be able to gain more clients due to your reputation for honesty and open communication.
Extensiv 3PL Warehouse Manager
3PL warehouses are experiencing record growth and change. In order to stay relevant and grow, you need to be ready to advance with technology so your critical system can continue to evolve and improve. You want your 3PL business to grow, and the key to that is making sure you are advancing in technology with the latest WMS for your 3PL warehouse business.
Choosing the right WMS is one of the most important decisions you can make to grow and modernize your 3PL. You don’t want to stay stuck in the past and be unable to figure out how to advance technologically.
Stop lost inventory and manual errors which cost your company thousands of dollars every month and chip away at your bottom line.
With Extensiv 3PL Warehouse Manager, you can:
- Shorten your order cycles while improving your warehouse efficiency by tracking every item in your warehouse via the cloud
- Automate orders with shopping carts and complete API/EDI integrations
- Use directed putaway to store inbound inventory
- Create repeatable and scalable workflows
- Send invoices in seconds
- Capture any billable event in the warehouse
- Segment inventory
- Handle billing and reporting
- Create flexible billing schedules for each customer
- Calculate charges for shipping, handling, and storage
- Use on-demand reporting
- Draft customer notifications
- Customize implementation programs
- Leverage API and EDI integrations to replace slow paper processes
- Utilize mobile scanning with 100% accuracy
- Handle custom integrations
- Print labels
- Shop shipping rates
- Enjoy unlimited software support with tech services from a team with custom EDI, API, report, and development skills
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 acts as the backbone for your 3PL business. It can transform paper-based, error prone businesses into highly competitive industry leaders.
Contact Extensiv today to request a free demo.
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