3PL
August 23rd, 2022

What Integrated Systems 3PLs Need to be Successful

Third-party logistics warehouses (3PLs) have been proponents of technology for many years. Even as the logistics industry has grown more precarious, eCommerce trends continue to drive technology innovation—especially for 3PLs who support brands and retailers.  As more and more brands and retailers try to find 2-day transit solutions to satisfy customers, shipping processes can become complicated. When 3PLs, brands, and retailers look at technology from an operational level, there is a lot more going on when you consider the onslaught of eCommerce and omnichannel fulfillment. For many of these logistics businesses, it is getting difficult to manage orders from so many different channels and customers, all of whom expect efficient and seamless fulfillment and delivery of their products. With so much change, technology will play a major role in maintaining process, accuracy, and efficiency. 3PLs, who support many brands and retailers, are the ideal leaders to help them adapt to this new landscape.  For years, 3PLs have been managing their businesses with technology and relying on warehouse management systems (WMS). However, a WMS won’t cut it anymore. To truly be competitive, 3PLs must invest in other technologies and integrations, including order management systems and transportation management systems. This edge will attract more customers and ensure that all operations are executed with agility and precision. 

Why 3PLs Need an Order Management System

While a warehouse management system can keep your facility in check, leading to optimal operational efficiencies, it is beneficial to also invest in an order management system. An order management system (OMS) is essentially a hub that systematically automates all orders from the moment a customer buys something to delivery. Ideally, 3PLs will choose an OMS that will support orders, no matter the channel, and will be able to support multiple shopping carts and marketplaces to support omnichannel fulfillment. This automation reduces errors that occur during fulfillment, while also helping organizations with reporting, listing management, and forecasting. 3PLs that don’t invest in this kind of software risk losing out to more technologically advanced companies that could poach their customers. 

With the right OMS, 3PLS will be able to automatically integrate all sales channels under one roof, so that each order, regardless of origin, can be automated. Businesses across the supply chain can see each order in real-time, and what step of the process it’s in, decreasing the chance of additional work and creating seamless communication among partners. Order management systems can also connect with warehouse management systems, using AI to route orders to the closest warehouse, which leads to quicker delivery and therefore, happier end consumers. 

Order management systems also can help with data procurement and prevent overstock or stockouts. A robust system will track data all across brands and channels, letting 3PL customers know how much inventory they need for next season, and what SKUs did well compared to others. Good data procurement can also help analyze what steps in the order process can be more time-saving, so organizations can plan better in the future. This kind of knowledge is vital for brands and retailers, and they are more likely to continue using a 3PL if they have access to this type of data.

Listing management is also a function of some order management systems. This tool allows brands to build consistent-looking product descriptions across channels or modify their listings based on the parameters of different marketplaces. If brands rely on manual labor to do this task, they risk making myriad mistakes that will erode their bottom line. A competitive 3PL, which is customer-serving, will optimize an OMS that can help mitigate and streamline any process for their brands and retailers. This optimization could also include repricing software that automates promotions or discounts based on the marketplace. 

What else should a 3PL look for in an OMS?

3PLs who are looking to invest in an OMS should seek one that is truly a one-stop shop for their customers. This means software that provides everything from order routing to printing shipping labels, seamless setup, alerts based on product and category for efficient management, replenishment, and kitting, in addition to optimized first article inspection. 

An OMS should also integrate with leading e-commerce platforms so growing brands can utilize the software as they add new sales channels. In addition, it should also prioritize data management, such as predictive analytics. 

Essentially, if an OMS can help 3PL customers on their journey toward growth and meet the needs of consumers, then it will be useful, and wise, for a 3PL to invest in one. 

Why 3PLs Need a Transportation Management System 

A Transportation Management System, or TMS, is a technology that manages all elements of an organization’s transportation processes. These elements include loading, routing, and tracking. Like an OMS, a TMS can be integrated with a WMS. If a 3PL does not invest in a TMS, then they risk supply chain inefficiencies that culminate in longer delivery times, lack of visibility, and a general distrust among partners, such as customers and shippers. 

A TMS supplies transparency to 3PL partners, including real-time updates regarding the location of goods and even geo-fencing, which provides a virtual fence around a certain location, notifying you when a driver has crossed the ‘“border.” A TMS can also optimize routes. Let’s say you’re working with a distributor who is shipping items to separate stores; a TMS can optimize the route a driver needs to take to make all their deliveries in a timely manner that correlates with the stores’ hours. 

Moreover, a TMS can help with loads. With automation features, you can set up your system to accept loads that meet specific guidelines, which omits any questions about what loads are accepted and allows you more flexibility to oversee other parts of your business. Likewise, a TMS allows for load consolidation, coordinating shipments based on dimensions and size. This function allows 3PLs to optimize space and helps 3PL customers cut costs since their items are sharing rides with same-sized parcels. Similarly, a TMS can allow 3PLs to provide capacity via backhauls. The software can produce the backhaul using the freight carrier nearest to the backhaul location and allocate an order to that driver. The system can also recognize whether the driver has enough time to make the delivery. 

What else should a 3PL look for in a TMS?

When deciding to invest in a TMS, 3PLs should look for end-to-end implementation. The system should be able to choose the correct carrier, follow through, track, and trace all orders, and optimize routes. Tracking features must include orders across shipping, middle management, and final delivery.  A robust TMS will also be able to connect with any supply chain partners plus thousands of carriers, giving customers visibility into any inefficiencies within the transportation process. It should additionally have flexible contract management with carriers. TMS software should also provide a procurement tool to handle carrier bids. This tool can retrieve private and public bid boards to evaluate capacity or multi-model abilities. 

A good TMS should also be easy to implement into an already existing business or technology stack. Moreover, with the craze of our current e-commerce landscape, you want to invest in software that’s intuitive for all team members, so there is no downtime spent teaching employees the intricacies of a new system.

3PLs need more than a WMS

Logistics and the supply chain are only getting more complicated. More and more 3PLs are struggling to navigate this new world of endless omnichannel orders, which means that a more robust technology stack is a need, not a want. To really be competitive and cutting edge in this industry, 3PLs must prioritize the latest software, including order and transportation management, to stay ahead of the curve, increase their bottom line, and fulfill their customers’ requirements. 

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Flora Collins

Written by Flora Collins

Flora Collins is a prize-winning writer and published author. As content manager, she is responsible for the development and creation of content for Verte blogs, case studies, ebooks, social media, and more. Flora aligns her strong communication and organizational skills to help deliver meaningful content and thought leadership to Verte prospects and customers.