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While there is a lot of hype around moving to the cloud, warehouse and inventory management might be seen as something that needs to be “on prem” and owned by a 3PL. But Software as a Service (SaaS) lets 3PLs provide better service for less.
A 3PL company must do two things to be successful: Provide the logistics services that will maximize their customers’ order fulfillment, and do it for an affordable price. Managing inventory using SaaS software allows them to do both of these things.
Choosing SaaS software over an on-premises system allows a 3PL to juggle as many products and customers as they want with less overhead and fewer headaches.
On-premises inventory management means the 3PL owns and maintains its software solution, as well as the hardware needed to run it (think servers). The company needs to choose and purchase (or license) software and install it. Ongoing hardware and software updates are an in-house responsibility, too.
SaaS are typically cloud based systems, eliminating the need to have any hardware or software on the premises. For a monthly subscription, 3PLs have full use of the software on any desktop or laptop computer, tablet, or smartphone. All that is necessary is an internet connection and an account with the software makers.
Without physical hardware or software to maintain, SaaS has lower overhead costs than an on-prem system. Those overhead costs are basically covered by the SaaS provider, who spreads it out over many customers and builds it right into the software price. This is especially good news for 3PLs, who might not have the budget for a more robust system. Cost savings can be passed directly on to a 3PL’s customers. Meanwhile, the 3PL operates with greater efficiency, allowing them to take on additional customers and more products, bolstering their bottom line.
With on-premises inventory management, a company will need to decide where they will put the equipment before they even consider which software to use. This might mean constructing a special server room that is secure, climate controlled, and with the utility configuration to supply the equipment with sufficient power.
Housing the equipment incurs carrying costs just like inventory does. Every bit of space taken up by a server could be used for something else. Add in utilities, insurance, security, and power consumption and the costs add up.
Deciding what hardware and software to use for on-premises inventory management is just the first step. You’ll need a considerable amount of time and effort for its installation, configuration, and launch. It will be stressful for everyone during the testing phase until the system is up and running.
Most SaaS solutions are fully functional in a fraction of the time. While there might be a bit of setup involved, the actual infrastructure is ready in minutes. Thus most of the crucial set-up time can be spent thinking through the business needs of the warehouse, not waiting for facilities management or IT to get hardware and software set up.
Could using a cloud based system completely eliminate the need for an IT department? Possibly. Or it will at least redirect the IT staff’s purpose within the company.
SaaS customers are upgraded to the most current software versions automatically. They will not have to keep up with new version rollouts and find the time to buy and install updates or pay someone to do the maintenance.
All of the regular maintenance and updates go on beyond the scenes. And for the inevitable problems that are bound to come up, cloud based providers have the necessary support personnel available. This is especially important for small and medium-sized 3PLs that might have a very limited IT staff.
The very nature of a 3PL necessitates handling numerous customers, each with their own unique products and processes. This means that inventory software must be robust enough to manage all aspects of the logistics while automating key workflows.
Beyond that, 3PLs often have service agreements in place that give their customers a certain level of access to their information. More traditional on-prem inventory management software was rarely built to accommodate multiple customer systems connecting through the internet. SaaS systems, however, are built precisely so customers can access them that way. This means that it takes relatively less effort to empower a 3PL with the ability to provide helpful stand-alone dashboards to their customers—a great added service.
Being on the cloud means that SaaS solutions also provide easy access to data and transparency for all of their customers. Information is available in real time regarding inventory levels, velocity, order accuracy, and returns. Indeed, a typical SaaS solution has built in integration with all parties in the supply chain and can be customized easily to provide needed reports to customers and partners.
With an on-premises inventory management system, a 3PL might struggle to adapt every time they onboard a new customer, or an existing client adds a new product or process. If a 3PL can’t handle the change quickly and easily, it may be forced to turn away potential new revenue streams.
SaaS is built with scaling in mind. Each new product, change in billing cycle, or adoption of a value-added service can happen seamlessly. 3PLs will have the same experience whether they are dealing with 3 customers or 300.
Technology in general has moved to cloud based solutions, and inventory management for 3PLs is no different. Moving from an on-premises system to SaaS is more convenient and less expensive. Money that would have been budgeted for hardware, software licenses, and IT staff can be freed up for other purposes.
3PL companies can redirect their resources to support existing customers, save time and money by choosing the right, cloud-based, SaaS inventory management software.
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