3PL Software: choosing the right solution for business

E-commerce typically has a broad client network across various locations. Accurate order fulfillment is crucial for the stability of B2C businesses. This intricate procedure includes multiple stages, such as selecting items, packing them, processing orders, and monitoring deliveries to customers.

Many companies address these logistics challenges by setting up their own order picking and packing operations and engaging a carrier for delivery. However, this approach has significant drawbacks and can be costly. A more effective approach for handling inventory and streamlining order fulfillment is to collaborate with Third-Party Logistics (3PL) providers.

These providers are experts in the field and offer access to advanced 3PL software. This software automates many aspects of the logistics process. It enhances efficiency and reduces the risk of errors.

In this article, we will explore the role of Third-Party Logistics software in delivering goods for both e-commerce and offline companies. We will also discuss key factors to consider when choosing the best 3PL provider, including your business needs, budget, and overall goals.

What is software for 3PL?

In logistics, the supply chain comprises three key elements: product manufacturing, a transportation company for delivery, and a third-party logistics (3PL) provider that manages storage and distribution.

3PL companies often operate as distribution centers (DC) located in major cities. This setup allows them to handle large volumes of cargo more efficiently. These hubs have storage spaces and ensure timely delivery to customers.

Effective communication among supply chain participants is crucial for successful logistics. 3PL providers require mechanisms to manage logistics seamlessly, including storage and order fulfillment.

This is where 3PL software becomes invaluable. It organizes and automates logistics processes, boosting efficiency for both 3PL companies and their clients. The software enhances communication, storage, distribution, and customer service.

These improvements lead to significant cost savings through:

• route optimization,
• reduced fuel expenses,
• lower maintenance and delivery costs.

Thus, 3PL software ensures transparency and optimization throughout the supply chain, driving business growth and boosting profitability.

Types of third-party logistics software

3PL logistics software facilitates accurate calculations for optimal delivery choices in both B2C and B2B sectors. These sophisticated digital tools keep 3PL providers at the cutting edge of logistical advancements.

The software solutions developed for 3PL cover a broad range of functionalities. Each is designed to address specific challenges and ensure smooth operation of complex logistics processes.

Let's explore the main types of software for 3PL that have become essential in transforming logistics.

Software for warehouse management system (WMS)

Warehouse Management System (WMS) software is used for fast and efficient order fulfillment. This specialized 3PL software optimizes storage, movement, and inventory tracking within warehouses. With real-time inventory visibility, smart picking and packing recommendations, and performance analytics, WMS enhances the accuracy and flexibility of warehouse operations.

Enterprise resource programs (ERP)

Enterprise Resource Planning (ERP) systems are comprehensive and all-encompassing software solutions for the 3PL logistics model. The benefits of this 3PL software include providing logistics providers with a unified platform to integrate key financial and operational business functions. ERP systems cover a wide range of capabilities, including inventory management, order fulfillment, accounting, human resources (HR), and customer relationship management (CRM).

Supply chain management systems (SCM)

Supply Chain Management (SCM) systems oversee every stage of the supply process. From product development and manufacturing to warehousing, inventory control, and distribution, SCM offers a holistic perspective on the logistics network, enabling the seamless coordination of supply chain activities.

While SCM systems share features with Warehouse Management Software (WMS), they go far beyond these functions. SCM also includes transportation management, supplier relationship management, and pricing dynamics, making it an essential tool for comprehensive supply chain management.

Supporting programs and systems

Supporting programs and systems are essential components that ensure the efficiency of 3PL logistics operations.

1. Transportation management system (TMS)

TMS is responsible for coordinating the movement of goods. The system optimizes the transportation process by selecting carriers, optimizing routes, conducting freight audits, and providing real-time tracking. Using TMS allows 3PL providers to effectively manage the delivery chain while minimizing transportation costs.

2. Order management system (OMS)

OMS acts as a conductor in the order fulfillment process. The system harmonizes orders from various channels, manages inventory availability, and coordinates seamless order processing. By effectively managing operational order processes and working with multiple sales channels, OMS enhances customer satisfaction by ensuring timely and accurate order fulfillment.

3. Tracking and visibility software

Tracking and visibility software is essential for maintaining the dynamics of the supply chain. This 3PL software provides customers and stakeholders with instant access to the status and location of shipments. It improves communication and trust across the supply chain, promoting transparency and providing proactive updates.

4. Analytics and reporting tools

Accurate data obtained in real time is crucial for rapid response to issues. In the 3PL model, analytics and reporting software transforms raw data into a powerful online information tool. By analyzing historical and current data, 3PL companies can optimize routes, forecast demand, and identify weak points for improving operational activities.

5. Customer relationship management (CRM) software

Beyond operations, strong customer relationships are crucial in 3PL. CRM software helps providers manage customer interactions, track communications, and tailor services to meet specific needs. This fosters loyalty and long-term partnerships.

Benefits of 3PL software

3PL software offers numerous benefits for logistics companies. It provides a range of tools to improve supply chain management, automate processes, and optimize resources. In this section, we will outline the key benefits of 3PL software. These include reducing operational costs, minimizing errors, automating tasks, and supporting scalability. We will also explain how the software aids in adapting to changes, managing inventory precisely, optimizing routes, providing real-time visibility, and simplifying collaboration with suppliers.

Reduced operating costs, time savings

Third-Party Logistics Software optimizes logistics processes, reducing operational costs and saving time. Automation and increased efficiency reduce manual labor and eliminate unnecessary expenses.

Avoiding human error

3PL software reduces the likelihood of human errors. By automating routine tasks and managing data, it boosts the precision and dependability of logistics operations.

Automation

Automation is a significant advantage of 3PL software. It handles repetitive tasks, from inventory management to order processing, freeing human resources for strategic activities.

Scalability and growth

3PL software supports business scalability. As operations expand, the software easily adapts to growing volumes, enabling companies to grow without significant additional investments.

Adaptability

Flexibility is essential in the ever-changing logistics landscape. Third-Party Logistics software evolves with new business demands and market conditions, ensuring ongoing adherence to current requirements.

Precision inventory management

Precision in inventory management is achieved through real-time tracking and automated updates. This reduces the risk of stockouts or overstocking, optimizing inventory levels and improving service quality.

Route optimization

Software for 3PL enhances route optimization, improving delivery efficiency. It calculates the fastest and most cost-effective routes, reducing delivery times and transportation costs.

Real-time visibility

3PL software delivers real-time visibility, allowing instant access to shipment status and location. This feature enhances transparency and enables proactive management of potential issues.

Reporting and analytics

Advanced analytics and reporting tools in 3PL software offer valuable insights into operational activities. They help identify trends, forecast demand, and make data-driven decisions for better strategic planning.

Simplifying cooperation with suppliers

3PL software simplifies supplier interactions. It integrates communication channels and coordinates activities, ensuring smoother collaboration and more efficient supply chain management.

What to look for in choosing the right 3PL software

Easy integration and use

The software should seamlessly integrate with the systems you already use, such as ERP and accounting programs. It’s also important that the interface is user-friendly and intuitive for your staff.

Introduction of the latest technologies

Choose software that incorporates the latest technologies, like warehouse automation, cloud solutions, demand forecasting, and AI implementation. These features enhance operational efficiency and reduce errors.

Compliance with labeling and packaging rules

Ensure the software meets the labeling and packaging regulations in your industry. This is crucial for complying with legal and customs requirements and avoiding potential fines.

Invoicing function

Look for software that supports automated invoicing. This will simplify financial management and eliminate errors from manual data entry.

Support for multiple user accounts

If your company operates with various teams or departments, select software that allows for multi-account setups for different user groups.

Dedicated customer portal

A customer portal enables clients to track their orders, improving customer service and satisfaction.

Specialized inventory management capabilities

The software should offer advanced inventory management features like demand forecasting, automatic replenishment, and the ability to manage multiple warehouses simultaneously.

Conclusion

In summary, implementing software solutions for 3PL models in modern B2C and B2B businesses, especially in e-commerce, elevates delivery processes. It is a strategic move that optimizes your logistics operations today and facilitates smooth scaling in the future.

Advanced software can be easily integrated into local company logistics systems. This means you'll gain access to cutting-edge technologies and tools for precise inventory management and efficient order fulfillment.

As your business scales, 3PL software will quickly adapt supply chains to growing customer demand and optimize every link in the logistics process.

By making an informed choice, you will not only enhance your logistics but also boost customer satisfaction, ensuring your business remains competitive in a rapidly changing market.

FAQ

How do you realize you need 3PL software?

3PL software may be needed if your business is scaling, or you encounter difficulties managing logistics operations. Significant errors in inventory and order processing can also indicate the need for 3PL software. If your current systems can't keep up with demand, or you face inefficiencies affecting your profits, it's time to consider investing in a 3PL solution.

Which is better, open-source 3PL software or proprietary 3PL software?

Both options have their advantages. Open-source 3PL software offers flexibility and can be customized to meet specific needs. However, it may require in-house technical experts. On the other hand, proprietary software typically comes with professional support, regular updates, and a more user-friendly interface, making it ideal for businesses that prefer ready-made solutions.

Are there disadvantages or limitations to using Third-Party Logistics Software?

Yes, they can be. Some potential drawbacks include initial implementation costs, time needed for staff training, and possible integration issues with existing systems. Additionally, reliance on the software means that any technical problems or downtime could disrupt your logistics operations.