Third-party logistics providers (3PL) can be an effective strategy for e-commerce companies to more efficiently manage supply chain logistics . In our current lightening-speed age of instant gratification, customers want real-time updates and on-demand package tracking, standardized two-day (or less!) shipping, and sellers need immediate analytics, data and insights to fulfill the customer needs.
The traditional warehouse and transportation service model is not enough to manage those advanced problems anymore. Modern 3PLs need to incorporate technology and evolve their processes to keep up. Sellers are more often turning to technology-focused 3PLs for logistics services to stay on top of growing consumer demands and customer expectations.
What is a technology-focused 3PL?
A 3PL provider that is tech focused has developed solutions to streamline shipping and order fulfillment to meet sellers needs, often leveraging state-of-the-art information technology tools to do so. In addition to the traditional core competency fulfillment services and logistics operations that 3PLs and other logistics companies offer such as inventory warehousing, picking, packing, shipping, as well as value-added services, most 3PL companies offer updated tech tools they are also able to provide software that can integrate data from multiple sources to give both the seller and consumer a complete look into the lifecycle of the order fulfillment process and help with decision-making.
Using software to link fulfillment centers to retailers, carriers and more, vital information can flow throughout the supply chain and back to the seller to help them make efficient operating decisions. This combination of logistics and technology provides a complete end-to-end ecommerce fulfillment solution.
One of the best examples of a 3PL service’s technology is EDI. EDI stands for electronic data interchange. It is an amalgamation of systems and processes that allows manufacturers the ability to share documents and a variety of transactional information with the vendors, suppliers, and brands that they work with. EDI systems help improve both the speed and accuracy of a manufacturers’ business related documents as they are shared with their various counterparts.
What is 3PL order fulfillment software?
Order fulfillment software is usually a cloud based system that helps a 3PL automate supply chain management, inventory management, transportation management and warehouse management, shipping, as well as provide a seller with the ability to track orders and sales. Fulfillment software can integrate with other software systems—like a seller’s online storefront—to facilitate a streamlined flow of information.
Fulfillment software also directly connects to the 3PL’s warehouses and fulfillment systems, allowing for real-time information such as tracking, inventory levels, along with additional valuable information.
How does a technology focused 3PL help sellers?
1. Save Time by Automating Processes
Instead of manually entering and sending orders to a 3PL every day, fulfillment software can eliminate this step completely for sellers. Since a 3PL’s software technology can integrate directly with online storefronts, the warehouse where products are located is automatically notified as soon as a new order comes in.
Each order fulfillment step is documented and updated in real-time, so the status of every order as it moves through picking, packing, and shipping, can be easily tracked and viewed by the seller. This unlocks supply chain visibility to search for specific orders, enabling the seller to adequately manage their inventory and sales.
Additionally, fulfillment software integration other steps in the order fulfillment process to be automated as well: reordering inventory, checking product levels, and processing returns. This saves time, and helps get deliveries to customers sooner.
2. Drive Down Fulfillment Costs
In the fulfillment process, one of the best ways to save money is on shipping costs. A 3PL will be able to negotiate discounted shipping rates based on its size and volume, but costs can also be reduced by cutting down on the distance that packages have to travel to their destination.
To allow for this, inventory can be split across many fulfillments centers to ship from warehouses that are the closest to customers. Fulfillment software can use historical data to better guide in strategically distributing inventory.
3. Gain Insights for Data Driven Decisions
Using advanced metrics provided by fulfillment software can help to eliminate guesswork when making future decisions for shipping and logistics. Customized metrics, such as revenue of orders shipped by day, sales by channel, peak fulfillment times, and sales and quantity of orders based on USPS zone, can help a seller make more effective supply chain decisions. Warehouse management systems (WMS) as well as transportation management systems (TMS) can be a boon for any ecommerce business looking for better logistics management
Over time, by sticking with the same 3PL and fulfillment software, more data is collected which can lead to more informed strategic decisions.
4. Reduce Errors
When manually sending orders from a seller to their 3PL, data entry errors are bound to happen. Even the smallest error —like an address typo or incorrect SKU—can cause huge problems. They can lead to exchanges, replacements, and returns that are time consuming, expensive, and frustrating for customers.
Having a technology-focused 3PL that automates this process by integrating systems directly, can cut down on the chances of human error or duplication of orders.
These connected systems also allow the seller with a transparent look into how their 3PL is performing. By connecting the fulfillment steps and supply chain processes, it is possible to view the accuracy of the 3PL as each step is taken.
5. Improve Customer Service
A smooth order fulfillment process will keep your customers happy, that’s the very heart of why all of this matters. And fulfillment software can help to give a seller the complete picture of the entire process, in order to improve or continue with what is already working.
Since the 3PL’s technology provides the most up to date information to the seller, any customer inquiries can be answered immediately with accuracy. This enables greater consistency, precision and transparency that can be conveyed to the customer.
A technology-focused 3PL can help a seller ensure fast and accurate customer service, which has come to be expected in the current Amazon Prime standard environment. In the absence of technology, same- or two-day delivery would be impossible to execute.
Working with a technology focused 3PL can help save time, drive down costs, reduce errors, improve customer service, as well as give valuable analytical insights that help your business become more efficient and effective
If you are seeking logistics support we’d love to hear from you. You can read DCL’s list of services to learn more, or check out the many companies we work with to ensure great logistics support. Send us a note to connect about how we can help your company grow.