Are you a Standard Warehousing Business or a 3PL Warehousing Business?
If you are in the business of warehousing or Third-Party Logistics (3PL) and you want to adapt to the new numerical world and gain productivity and accuracy, then exploring the benefits of a warehouse management system is imperative for your businesses experiencing growth.
Third-party logistics (or 3PL) is a fulfillment service that manages logistical operations for a company which can me more then only warehousing. Here we will focus on the warehousing aspect only.
We differentiate 3PL from regular warehousing by asking the question of who owns the inventory that is in your warehouse. A business that buys the inventory at a cost, sells it at a new price and makes its money on the profit is a regular warehousing business. 3PL does not owns the inventory therefore can’t make money on the item’s profit but makes its money on charging the customer for services, such as storage, handling and other special tasks. In this case it is your customer who owns the inventory.
Growing businesses with warehousing operations will benefit greatly from using a standard warehouse management system (WMS) or a specialized 3PL WMS software.
In general, the WMS monitors work processes at various levels, enhancing productivity and increasing asset utilization. Here are a few basic functionalities of a Standard WMS.
SPACE
- Optimized space, Inventory visibility, Inventory accuracy, Zone and pick bin replenishment, Cycle count
- Traceability of Materials: Lot, Batch, Series No, Rotation of inventory FIFO, LIFO, FEFO
TIME
- Effective shipment and productivity with deliveries appointment, pack and wave picking
QUALITY
- Increase in throughput and reduction in errors by using scanning processes, KPI
- Leveraging on additional automation technologies which results in a continuous improvement of the warehouse performance
Standard Warehouse Management systems bring many benefits to the warehousing industry, but 3PL required more functionalities.
3PL business have different requirements than a standard warehousing business.
Let’s review a few of these:
- SPACE: Optimization of cubage usage and not just space.
- CARRIER CONTENTS: Knowing and tracing the various boxes carrying units as opposed to only tracing the unit quantities in stock.
- RECEIVING: There are specific needs for receiving goods. Since 3PL do not buy the goods, 3PL should not have to process purchase orders that create vendors’ ledgers entries and related expected account payables.
- SHIPPING: The same applies for shipping. No need to end up with some false customer ledgers entries and expected account receivables.
- SCANNING: Scans functionalities that can be adjusted to specific customers’ requirements.
- AUTOMATIC INVOICING: There is a need to invoice diverse services such as
- Base service to maintain the items in stock
- Labeling items
- Repacking
- Sorting goods
- Managing expired items
- Storage costs when offering various logic (cubic usage, number of skus etc.) to calculate by week or by month and be specific to customers
- Automation of invoicing these services results in saving time and improving accuracy.
- INSURANCE: Calculate inventory value to know the insurance required to maintain proper insurance for customer items that you stock in your building but do not own.
- FREIGHT FORWARDING: Sometimes a 3PL will need to manage the freight “from and to” multiple locations, with multiple carriers and international customs transactions.
- TMS Transport management
- Data information
- Data must be customer specific and enable managing for many customers
- Specific customer items
- Specific customer service contracts and prices
- Specific customer warehouse strategy for storage processing, cycle counting, shipping, labels, transportation
- Specific customer reports layout.
- Automation processes: If the 3PL does not have the above functionalities in place, then often the business relies on Excel and weak architectural system designs, using manual and non-productive processes.
Warehouse Management Systems can help companies maximize profitability and reduce errors. What is your mission and which system will best fit your business needs?
3PL Microsoft Dynamics 365 cover those critical functionalities required by a 3PL warehouse.
Contact us for more details. PLSolutions
