Third-party logistics software, commonly referred to as 3PL logistics software or 3PL software, is a type of software solution that facilitates the unique requirements of 3PL companies at every level.
3PL software is designed to help any 3PL business manage the ordering/purchasing, warehousing and transportation of goods and supplies for another company. This category of software is typically comprised of procurement solutions, fright broker tools and warehouse management systems, which are utilized for tracking shipments, purchase orders, warehouse inventory and transportation data like delivery routes, couriers and real-time locations.
3PL software is a comprehensive business management solution tailored for third-party logistics companies, allowing them to effectively manage their entire third-party logistics operation, from sales and marketing to finance and the day-to-day processes. 3PL software solutions often specialize in delivering affordable and efficient logistics services to customers, which range from small and midsize businesses (SMBs) to large international corporations.
Types of 3PL logistics software
Three main types of 3PL software are available on the market. These are standalone warehouse management systems or 3PL WMS, enterprise resource planning or ERP systems and integrated supply chain management or SCM suites.
The following are the three major types of 3PL software with brief information that you can use in your journey of finding the right solution for your 3PL business:
The main objective for utilizing this type of 3PL software is to boost the efficiency and productivity of warehouse operations for third-party logistics companies, by simply automating and accelerating some of the core processes associated with warehouse management. Although many of the standalone WMS products in the market are highly customizable, you should look for warehouse management software that comes with features such as order processing, inventory receiving, picking and packing, tracking and shipping.
Supply chain management systems provide many of the same functions and capabilities of standalone warehouse management solutions. The main difference is the few extra features in SCM systems that give you and your team the ability to not just monitor but control several aspects of your supply chain, such as pricing, supplier relationships and freight transportation.
SCM suites are meant to improve the security, mobility and visibility of your 3PL operation while helping to reduce operational costs. It also helps with improving the collaboration among different aspects of your supply chain management process.
An ERP 3PL system can be combined with WMS to form a centralized solution, along with several integrated modules. Moreover, ERP systems are meant to give 3PL providers a unified platform to help consolidate their business’ main operational and financial functions. This category of 3PL software is often equipped with features for accounting, order fulfillment, inventory management, HR management and customer relationship management (CRM).
If you go with an ERP system that’s tailored for 3PL, every department within your organization, such as accounting, production, sales and marketing, will have access to a shared database that will provide them with all the information they need to perform their tasks and fulfill their roles within the company.
Finding the right type or category of 3PL software will depend on the processes and requirements of your 3PL operation, the budget that you’re willing to spend on such a technology, as well as the technical know-how and adaptability of your team. It is vital to carefully assess the different options available to you, so you can choose the 3PL software solution that perfectly suits your daily operational requirements.
How to choose which 3PL logistics software to buy
Some of the main deciding factors for choosing 3PL software are its capacity to handle your core processes such as warehousing, shipment tracking and order fulfillment.
In addition, it is also vital to determine which type of buyer you are or what type of operation your company represents. All these can help point you toward the right 3PL software to accommodate your operational needs.
Which type of buyer are you?
The majority of businesses and organizations that are looking for third-party logistics software fall into one of the following categories:
3PL logistics providers
Obviously, one of the main users of 3PL software is third-party logistics providers. Since 3PL companies typically cater to a lot of different customers from a variety of locations, they will want a 3PL solution with powerful features and capabilities, especially when it comes to inventory control, accounting and customer relationship management (CRM). These types of buyers will most likely prefer a comprehensive 3PL software solution with WMS, CRM and fully integrated SCM functionality, such as the Da Vinci SCM suite.
Specialized supply chain and shipping service
Buyers in this category are companies and organizations that specialize in one specific niche within the third-party logistics, warehousing and supply chain management sector. For instance, a shipping company will prefer a 3PL software solution with integrated transportation service capability, while a warehouse manager will need a warehouse management system for 3PL that offers powerful inventory control. A distribution center, on the other hand, will want a 3PL solution with dispatch and order fulfillment capabilities.
Small domestic transport and courier service
Smaller 3PL companies that are dealing with local or domestic products and goods are often looking for 3PL software with simpler and more specific features and capabilities. If you’re a small 3PL business that only handles local or domestic goods, for example, then you’ll want a 3PL logistics solution with more localized features. You might prefer a WMS, for example, with scaled-back functionality, designed for ease of use instead of being a one-stop solution for all third-party logistics processes.
Once you have identified which type of buyer you are and you have determined the kind of tools and capabilities you need to facilitate your 3PL operation, it’s time to consider the kind of features that you need in your 3PL software.
Key features to look for
The following are some of the key features you should consider when evaluating different third-party logistics solutions for your operation:
In addition, good 3PL software should also make it easier and more efficient for you to onboard new fulfillment clients such as setup wizard, which is capable of simply copying configurations from other clients and automatically syncing relevant data from existing clients’ systems. Finally, the 3PL logistics software should provide a robust knowledge base that includes all the technical aspects to help you manage and navigate the software more easily.
Also, you will want features like client logins and dashboards, including the ability to access and produce their inventory and dashboards. This offers full transparency for your clients, which also improves customer/client relationships.
When it comes to reporting, you will want a 3PL system with a powerful reporting function that allows you to utilize meaningful insights for data-driven business decisions. Having the ability to capture the right insights at the right time and being able to leverage the intelligence to optimize 3PL operations is what will provide your company with the edge over the competition.
Another good function to have, if you’re handling perishable items and apparel with expiration dates, is lot control. This feature offers precise granular tracking capability for your inventory lots, seasonal products and perishable goods. With specialized attribute tracking, you can organize your warehouse space and inventory more practically and efficiently, ensuring all goods are available and can be shipped out to customers on time.
For this reason, you’ll want a 3PL solution with a client portal that provides your clients with complete inventory visibility and access to real-time data. This allows them to determine their products’ status as it all moves to various touchpoints in the warehouse.
There are many other features that you might want in your 3PL software that are specific to your unique requirements. However, the key features mentioned above are crucial to any 3PL company and provider looking to maximize the value and usability of their 3PL software, thus ensuring maximum ROI.
Functionality to look for
The components of the list above are the key features you want in your 3PL software to help you with the different aspects of your 3PL operation. In the following list are the functionalities that you need to help make things easier and more efficient for your team as well as your customers.
Important purchase considerations
3PL software solutions can differ according to requirements, scope and operation size. When evaluating 3PL platforms, you have to consider the key criteria that matter most to your business. The criteria may include integration capabilities with backend applications, system scalability or mobile support. The following are some of the important purchase considerations when selecting a 3PL software solution:
By taking these considerations and applying them to your decision-making process, you should be able to find the right 3PL software for your business.
Whether you’re a 3PL provider who wants to automate and streamline your core processes or an organization that’s looking to outsource control of order fulfillment, the right 3PL software is crucial to customer satisfaction and the key to success for improving operational efficiency and productivity. The benefits of 3PL systems are just undeniable.
When evaluating different 3PL logistics solutions, you should consider your main requirements as a business, then figure out the features that you might need based on which type of buyer you are. Consider your options and assess each one to determine whether they have the capacity to deliver the functionality you’re looking for. You should also take into account a few purchase considerations that are unique to your specific situation.