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    October 19, 2021

    What 3PLs Should Look for in Inventory Management Software

    Supporting multiple clients means handling not only unique product lines, but different processes and vendor relationships while maintaining customer satisfaction. This requires a different kind of inventory management software to address a 3PLs’ needs.

    The struggles of managing inventory for a 3PL are the same as for any business—only multiplied. Supporting multiple clients means handling not only each one’s unique product line, but also their processes, vendor relationships, and customer satisfaction. 

    A 3PL is a depository for mounds of data. Without an efficient means of wrangling it, the 3PL can’t do the job it was hired to do—fulfill orders. Like an orchestra conductor, a 3PL must bring together a number of musical instruments that are all doing something different, and turn out a successful performance. 

    The key for 3PLs is to bring all of the data together with one software platform. The right inventory management software will provide efficiency, transparency, and integration for all clients, no matter what they are selling. Here is what to look for in inventory management software:

    Managed Access for Clients and Their Customers

    Partnering with a 3PL requires an enormous amount of trust by clients, and that doesn’t end once the contracts are signed. Clients need transparency from their 3PL in the form of access to certain portions of the inventory management software. 

    3PLs need software that provides clients with the vital information they need to make intelligent business decisions. Clients need reports with KPIs that are meaningful to their operations and give them a picture of how they are doing. 

    Customers of the 3PL clients should also have access to certain information housed in the Inventory management software. For example, it is commonplace to track an order’s progress on its journey to the customer’s doorstep. The 3PL is in charge, customizing the data and giving access to only those pieces that make sense for that particular client or their customers.

    Real-Time Data and Machine Learning

    To maximize efficiency in fulfillment, inventory management software needs to provide data in real-time. Barcode scanning makes it possible to know exactly what is in stock, where it is located, and give alerts on when to order and in what quantities.

    Predictive analytics look at past data to let the 3PL and its clients know what to expect in the coming days, weeks, and months. With time, the system will learn more to anticipate and forecast seasonal shifts and trends.

    Workflow Management

    Inventory management software helps a 3PL design their entire fulfillment process. It can instruct them on the optimal ways to organize their slotting and storage space, designate and stock forward picking areas, and choose picking methods and paths.

    Every one of the 3PL’s clients could have a different fulfillment process. The best inventory management software will help streamline the various workflows by creating unique job recipes for how each product should be handled. This might also include special kitting processes, or a method of packaging and presentation that is consistent with a client’s branding.

    Juggling Rules, Regs, and Requirements

    Special job recipes that ensure an optimal customer experience are not the only rules that a 3PL must follow. If their clients have SLAs with big box stores or their products are subject to government regulations, there will be additional hoops they must jump through. 

    The right inventory management software can assist in label compliance, custom cartonization, and appropriate storage and packaging. For example, food and beverages must adhere to very strict codes. Not only is this important to maintain the client’s relationship with these government bodies, failure to do so could be subject to fines or sanctions.

    Sales Channel and Supply Chain Integration

    Inventory management software must speak the same language as every sales channel, shopping cart, and supply chain partner. Integration with these other entities, whether they are vendors or shippers, is a must. This means working with the appropriate EDIs or APIs.

    Integration allows the 3PL to shop not just for price, but also quality, delivery speed, and lead time. In turn, clients can see that the 3PL is making the connections that are best for their own bottom line.

    Cost Accounting for Savings and Client Billing

    Great inventory management software captures data for every nuance of the fulfillment process. 3PLs can track analytics for receiving, putaway, storage, quality control, picking, packing, and shipping. This knowledge allows them to ensure that every aspect is running at its most efficient.

    In addition to assessing the warehouse’s efficiency, this also allows them to assign a cost to each part of the process. Attention can be given to areas that are costing too much, while savings can be passed along to clients. This cost analysis can be reflected in what the 3PL bills the client.

    Scalability for 3PL and Its Clients

    Growth is important to both a 3PL and its clients. The inventory management software used by the 3PL must allow for smooth and effortless scaling.

    When a client adds new products, new distribution centers, or enters a new market, they need to know that their 3PL can handle the addition. Likewise, a multi-facility 3PL should be able to expand easily as data from new warehouses is added into the mix. 

    The same goes for new sales platforms. A client who uses Shopify should be able to easily transition to also selling on Amazon or Etsy without having to upgrade to a new inventory management system.

    Setup, Security, and Support 

    Last, but definitely not least, 3PLs must choose an inventory management software that can be set up without extensive downtime or hassle. There must also be adequate support staff to help implement and customize the software and reports for not just the 3PL but their clients. 

    Revisiting the idea of the trust clients put in 3PLs, security for client and customer data is of utmost importance. If a 3PL can’t prove that their inventory management software is keeping information secure, clients will take their products elsewhere.

    Inventory Management Software for Growth

    Clients choose to work with a 3PL because they have grown to the point where it is not feasible or cost-effective to handle fulfillment themselves. But the growth doesn’t end there. Further scaling is a primary goal for most companies, so 3PLs have no choice but to scale right along with them. 

    In the search for greater efficiency, transparency, and integration, inventory management software is the key. It allows 3PLs to support their clients with everything they need to help them grow.


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