Enhancing 3PL Value: The Power of Advanced Warehouse Management Systems

Abstract

Third-party logistics (3PL) providers are increasingly adopting advanced warehouse management systems (WMS) to maintain a competitive edge by optimizing warehouse operations, generating new revenue streams, and strengthening customer relationships. This blog explores how WMS plays a pivotal role in supporting core 3PL business activities by boosting productivity, improving space utilization, offering comprehensive value-added services, and enabling rapid onboarding and integration. By leveraging these capabilities, 3PLs are well-positioned for long-term success in the dynamic logistics landscape.

Introduction

In the fast-paced world of third-party logistics (3PL) and supply chain management, a warehouse management system (WMS) is indispensable for optimizing warehouse operations and increasing revenue. For 3PL providers, effective warehouse management is not just a necessity but a key differentiator for maintaining a competitive edge and meeting ever-evolving customer demands. This blog explores the core value drivers for 3PL companies and demonstrates how WMS software is pivotal in achieving these goals.

Revenue-Generating Opportunities

An advanced WMS can transform a traditional 3PL into an innovative logistics services provider by unlocking new revenue streams and enhancing customer relationships. This transformation enables 3PLs to differentiate themselves in the market and position themselves as strategic partners to their clients. By leveraging this technology, 3PLs can effectively grow customer accounts through a range of activities, including:

• E-commerce Fulfillment and Reverse Logistics: Cater to e-commerce businesses by managing small parcel shipments and high order volumes. Offer comprehensive reverse logistics services, including returns management and product refurbishing.
• Comprehensive Value-Added Services: Expand offerings with services such as light manufacturing, kitting, labeling, assembly, and returns management. These services differentiate 3PLs in the market and can be efficiently managed and invoiced using advanced WMS solutions.
• High Volume Throughput and Handling Operations: Utilize advanced WMS to boost productivity by optimizing processes such as handling, picking, and packing. This allows a 3PL to efficiently manage high-value activities and take on more transactional business, focusing less on long-term storage and directly contributing to increased revenue.
• Rapid Onboarding and Integration: Quickly initiate operations and seamlessly integrate with external systems, including transportation management systems (TMS) and material handling equipment. This capability enhances the ability to win new business and maintain strong customer relationships by demonstrating operational efficiency and technological adaptability.
• Dynamic Pricing and Billing: Improved data and analytics enable the implementation of dynamic pricing models based on additional usage metrics, providing flexible billing options that attract more customers and enhance revenues and margins.
• Enhanced Data Analytics for Customer Insights: Leverage advanced data analytics to offer customers valuable insights into their inventory and supply chain, enabling them to optimize operations and further solidify the 3PL’s role as a strategic partner.

Operational Benefits and Savings

While an advanced WMS introduces many opportunities for 3PLs to enhance revenue, significant savings can be achieved quickly without the need to grow new business.

Labor and Productivity improvements

• Reducing Direct Labor Costs: With real-time visibility and automated processes, WMS dramatically improves labor efficiency, reducing the need for excessive manual handling and associated costs.
• Reducing Inbound Planning and Management Costs: Enhanced end-to-end visibility enables more accurate planning and efficient management of inbound material flows, saving both time and money.
• Reducing Outbound Operations Costs: Outbound appointment/dock scheduling, 3D yard visibility, and consolidation to the dock/staging area streamline the outbound process.
• Reducing Management and Administration Costs: Through real-time operational visibility and reporting, WMS decreases the need for intensive management oversight, lowering expenses.
• Improving New Hire Productivity: The intuitive interface of modern WMS solutions simplifies operations, making it easier to onboard and train new staff members, which reduces the learning curve and enhances productivity. This is crucial due to the dynamic requirements of a 3PL business.

Billing and Utilization improvements

• Improving Space Utilization: Sophisticated put-away processes in a WMS lead to efficient space utilization, maximizing the use of available storage area and reducing inventory carrying costs.
• Improving 3PL Billing Accuracy: By accurately capturing all operational activities and associated charges, WMS ensures precise and transparent billing, strengthening client trust.
• Reducing 3PL Chargebacks and Penalties: With enhanced tracking and reduced handling errors, WMS helps minimize product damages, returns, and associated chargebacks, protecting margins and client relationships.

Customer Satisfaction Improvements

• Improving Order Fill Rates and On-Time Delivery: WMS minimizes mistakes and errors in order fulfillment, ensuring higher order accuracy and better fill rates, which leads to improved customer satisfaction.
• Reducing Inventory Levels, Write-Offs, and Obsolescence Costs: Accurate and real-time inventory tracking through WMS prevents stock obsolescence and unnecessary write-offs, preserving company resources.
• Reducing Outbound Freight Spend: Through proactive planning and efficient operations management, WMS decreases reliance on costly expedited freight, helping control shipping expenses for customers.
• Reducing Regulatory Non-Compliance Penalties: Compliance is ensured through precise tracking, documentation, and reporting capabilities inherent in WMS, reducing the risk of non-compliance penalties.
  
  

Conclusion

Investing in WMS software offers 3PL companies a multitude of benefits, from new revenue opportunities to enhanced operational efficiency and significant cost savings. By capitalizing on the capabilities of WMS, 3PL providers not only maintain a competitive edge but also deliver superior service, ensuring long-term relationships and success in the logistics landscape. A well-implemented WMS is, therefore, not an expense but a strategic investment for 3PL companies striving for excellence.

Infor Warehouse Management System (WMS)

Distributors, 3PLs, and manufacturers can reduce costs and boost competitiveness by focusing on warehouse performance KPIs driven by advanced warehouse management systems. Transform warehouse operations with a tier-1, cloud-based warehouse management system. Our advanced WMS includes built-in artificial intelligence (AI) capabilities, 3D visualization, voice processing, embedded analytics, and more—to help future-proof your warehouses. Improve customer-level costing, billing, and invoicing with account-specific workflows—and gain traceability for multi-warehouse and owner operations.

The transformative power of Infor Platform Technology

Infor™ Platform Technology, powered by Infor OS (Operating Service), is the backbone of Infor WMS. This platform supports advanced analytics, AI, machine learning, and electronic supplier integration, providing logistics service providers with the tools needed to continuously enhance the customer experience. It also supports integration with third-party and custom development solutions, enabling full enterprise coordination and visibility. Infor OS connects the entire enterprise ecosystem, allowing for seamless integration and automation. This holistic approach enables logistics providers to innovate and customize services to meet evolving customer needs, driving long-term loyalty and success.

I invite readers to continue sharing their experiences and strategies related to leveraging advanced WMS in a 3PL environment. Your insights are invaluable in shaping the future of this industry.

Learn how to unlock value in your supply chain here.