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3PLs need to track data, not only to gauge their own performance, but also to provide reports to their clients. Providing thorough and customizable reporting gives 3PLs an opportunity to prove their worth.
Not only do 3PLs need to track data and metrics to gauge their own performance—they need to provide reports to their clients too.
A company’s choice to partner with a 3PL goes beyond simply outsourcing its fulfillment process. They also need access to certain data from their 3PL’s WMS. This allows them to see how fulfillment is going in real-time while also giving them metrics and KPIs that will help them make strategic decisions for their business.
Providing thorough and customizable reporting gives 3PLs an opportunity to prove their worth as a partner in their clients’ success. Clients will see the value, confirming that their choice of 3PLs to work with is the right one.
A 3PL can’t be successful without giving clients transparency, flexibility, and responsiveness with their report functions.
Although it is referred to as reporting, we’re really talking about access. There is less value in having software that just spits out reports at set intervals rather than letting clients access the system itself to view relevant inventory and fulfillment data at the moment, whenever they need to. This is where Customer Portals come in handy.
With a Customer Portal, access to data is managed by the 3PL, with the client designating what certain employees need to see to do their jobs. Access to information can be as broad or as specific as desired. For example, a company selling personal products might have a cosmetics division. Upper management may want to see how well the entire makeup sector is doing compared to the company’s other product lines. A buyer may keep track not only of eyeshadow sales but the velocity of each specific color. This data will drive whether a certain shade is reordered, discounted, or even discontinued.
Alerts are one of the most useful features of 3PL reporting. Inventory management data can indicate when products are running low, triggering a reorder for more. Adding in lead-time data from supply chain partners helps reduce backorders by ensuring the product is never out of stock.
Exception reports can trigger automation in pre-defined circumstances. For example, if an order goes unfulfilled for a longer-than-prescribed time period, systems will be engaged to find and resolve the bottleneck.
You may have heard the joke, “You can’t please everyone. You’re not pizza.” But as a 3PL, you have to do just that. Every industry is different, and even within one industry, every company is different. A 3PL can’t use a cookie-cutter solution and expect it to work for them all.
The best chance of pleasing every client is a system that begins as a blank slate and is completely customizable. First, clients choose which benchmarks and KPIs they need to track. From there, they can use smart filters and create queries to zero in on the data that is most meaningful for their enterprise.
The purpose of 3PL reporting is simple: It lets companies make better decisions that can reduce expenses and increase profits. Because every business is different, their reporting will be unique too. There are some metrics, however, that are somewhat universal. Here are the most common types of reports that 3PL clients might request:
Knowing how quickly items are selling helps in making a number of different decisions. It informs buyers how frequently they need to reorder products. It also can predict seasonal ramp-ups and show when an item is no longer in demand and can be discontinued.
When a 3PL is performing kitting of products, tracking the velocity of the individual components of the kit is essential if those pieces are also being sold separately. For example, one item in a kit might also be popular by itself. If kitting needs to pause often because the item keeps selling out, ordering might need to be increased.
Incorrect or incomplete orders result in unhappy customers and returns. Seeing the data on inaccurate orders can be valuable in getting to the bottom of quality control issues and picking errors.
Every business will have some returns, and some industries—such as apparel—have more than most. Knowing the frequency and reasons for returns can root out suppliers whose quality has declined, shippers who damage goods, or even a website that is confusing or has inaccurate item descriptions. Reporting may also show problems with the fulfillment processes in the 3PL’s warehouse. Once discovered, these issues need to be addressed by the 3PL, or they may risk losing that client.
Lagging delivery times can indicate it is time to assess and possibly change the carrier being used to ship products. Late arrivals of orders not only result in unhappy customers but can increase return rates too. Discovering this through reports gives the company the opportunity to make it right to retain the customer.
Inventory shrinkage through breakage, spoilage, or theft is an important metric to watch. Companies may discover a problem with the way items are being stored. They may need to make sure that FIFO or LIFO rules are being followed. Once found, these issues can be fixed. If a 3PL’s operations are to blame for high shrinkage metrics, it could ultimately cost them a contract.
Sellers will want to watch cycle times to reduce carrying costs in the 3PL’s warehouse. This is the amount of time inventory spends in the warehouse, from the time it is received until it is shipped to the customer. Not only is this important data in terms of sales velocity, but it can also save a company money if their 3PL is charging them based on their own internal costs.
Looking at the cost of every order based on material costs, shipping, and the price of the 3PL’s services can give companies a wealth of data. It will show which products are the best money-makers, where in the supply chain to look for savings, and how to tighten up processes in the warehouse, or whether their own pricing needs adjustments.
When a 3PL looks for WMS and inventory management software, their clients’ needs must be top of mind. This means that clients should have some say in what data they can use, and how granular their reports are. Needless to say, only current, real-time data will do—Not a report for last month, last week, or even yesterday.
Clients need to know what’s going on with their product while it is in the hands of their 3PL. Through clear, timely reporting, they can have at their fingertips the data they need to make decisions.
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