Best 3PL Logistics Software

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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.

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Expert Pick

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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:

• Standalone warehouse management systems (WMS): A 3PL warehouse management system is among the most common tools that 3PL companies rely on to facilitate their logistics operations. This type of software is used by third-party logistics businesses to manage their storage operations or warehouses. The software is capable of facilitating warehouse operations such as order picking and packing, inventory management, supply/material handling and even transportation management.

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.

• Integrated supply chain management suites (SCM): An integrated SCM system is a software suite that is designed to facilitate the entire supply chain process for 3PL companies, from product development to warehouse management, inventory control and shipping operations. The software will provide you with an overview of your entire supply chain, ensuring that every component and every moving part is seamlessly working together.

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.

• Enterprise resource planning (ERP): ERP systems for third-party logistics are enterprise solutions that are tailored for 3PL providers. Enterprise resource planning systems are fundamentally more complex types of 3PL software. They are a more comprehensive third-party logistics solution that effectively combines transportation services, supply chain management and distribution to streamline and automate your logistics operations.

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:

• Quick and simple onboarding: A good 3PL software solution should not get in the way of acquiring new customers. For this reason, it is important that you choose a 3PL logistics solution that provides you with a quick, easy and comprehensive onboarding process. This will help minimize the risk of human errors and/or miscommunication. It will help get new customers onboard more efficiently, which ensures immediate value for you as a client.

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.

• Multi-client management: If you’re a 3PL company that manages multiple clients, you will want a 3PL software solution that enables you to effectively manage order fulfillment and inventory for multiple clients within a central warehouse or storage facility. You have to make sure that you go with a 3PL system that can easily handle different clients within the same solution.

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.

• Advanced billing and reporting capabilities: Organizing and coordinating invoices, billing and receivables are critical functions of any 3PL software solution. For this reason, you should pick a third-party logistics system that can easily automate some of the core processes of your operation such as shipping, receiving, storage and put-away, so you can bill your clients accurately and on time, for the services they receive. In addition, you should consider multiple invoice formats and make sure that your 3PL system supports unique billing items.

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.

• Specialized attribute tracking: If you’re a third-party logistics provider and you have a warehouse that stores perishable goods like food and beverage or apparel, then you’ll want a 3PL solution that has specific inventory control functionality such as FEFO (first-expired-first-out) scheme. This is a direct picking function that picks out goods based on their expiration date. This picking rule is designed to keep your goods from losing their value due to spoilage in the case of food and beverage or becoming outdated for seasonal or trend-based apparel.

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.

• Client portal: Any good 3PL logistics software worth its price tag should allow its users to be proactive, instead of reactive, meaning it should do more than simply react to the complaints of unsatisfied customers. The 3PL system you pick should enable you to proactively keep your clients well informed by providing them with access to relevant information, especially when it comes to their products.

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.

• Integration with other business solutions: If you want to optimize your 3PL and warehouse operations, as well as create more streamlined workflows for your team, you need to choose a 3PL software solution that is designed to integrate with your existing core business solutions such as your accounting software, warehouse management system and CRM. Your 3PL software should also be capable of integrating with different marketplaces and storefronts such as Magento, BigCommerce, Walmart, Amazon and Shopify.
• Scalability of functionality: Third-party logistics providers will often have to scale their operations quickly, so it’s crucial to pick a 3PL system with powerful scalability functions. One key component that you want in your 3PL software is smart automation features that cater to multiple warehouse processes. Such features can facilitate business growth and operational efficiency. Some vital 3PL aspects that need smart automation are picking logic, order processing, kitting and assembly as well as billing.
• Custom configuration: The ideal 3PL logistics software caters to the unique requirements of your business, giving you the flexibility to customize or incorporate more functionality and requirements when necessary. For example, when it comes to optimizing workflows, your 3PL system should allow you to apply suitable rules to minimize travel time with the proper logical walk sequence within the warehouse.

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:

• Scalability in terms of cost: Your 3PL software should offer flexibility when it comes to the pricing structure. It should provide modular features, technical support and relevant maintenance services at a reasonable cost.
• Customizability in terms of meeting specific requirements: The 3PL software you choose should allow for customization so it can effectively address your specific operational needs. It should also be ready for future upgrades and can facilitate migration requirements to other platforms.
• Ability to integrate with other business ecosystems: Your 3PL solution should have the capability to integrate with your existing business ecosystems. It should be smart and robust enough to support different third-party applications, including delivery and distribution software, CRM, TMS and WMS.

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.

Key takeaways

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.

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