Unlocking value in the 3PL fulfilment model with advanced technology.

3PL fulfilment model

The eCommerce supply chain is dynamic and in dire need of increased visibility, accuracy, and transparency. To unlock efficiencies, eCommerce vendors are often dependent on third-party logistics companies, commonly referred to as the 3PL companies. They form the backbone of the logistics and supply chain systems. But their operations are primarily dependent on warehousing and fulfillment software platforms.

The fulfillment process of a single-store operator is in stark contrast with that of a 3PL company. Evaluating these differences and the order fulfillment process at 3PL company can give tangible insights into the room for improvement.

 

In-House vs. Outsourced Fulfilment

The key parameters used for deciding whether a business should execute a process in-house are its capital requirements and strategic importance to the business. The more strategically important a process is, the higher are its chances of being executed by an internal team.

Using the same principle, one can dissect the in-house operations of an eCommerce business. Companies using this model will allocate capital and human resources for managing the entire value-chain of storage, shipping, and logistics management. The first hurdle here is developing the capability of managing a warehouse in a structured manner, which has a direct positive impact on the picking & packing performance parameters.

An outsourced model will rely on a 3PL company and the eCommerce vendor working together. The vendor gets the order and then passes it to the 3PL company for fulfillment. The 3PL specialist then ensures a warehouse’s availability and takes comprehensive ownership of the shipping & logistics processes. 3PL companies generally provide picking & packing services to all the eCommerce vendors who use their warehouse resources.

 

How to Develop a Robust Fulfilment Process as a 3PL Company?

The 3PL company’s primary goal is to develop consistency and efficiency at a scale that makes it a trustworthy partner for the eCommerce vendors. This can be achieved using the following three functionalities available with the ideal technology platform:

I. Collecting and Categorizing Orders

Deploying the right technology is the first step to optimizing the fulfillment process. The 3PL company should have access to a technology platform that can automatically collect and categorize orders from many clients. This is a critical step in the fulfillment lifecycle as it ensures the right orders are matched with the right products every time. Ideally, the order fulfillment system used by the 3PL company should have accurate and consistent performance, even if the company is dealing with a varied list of clients. We recommend to explore OrderCircle’s Order Management Software, which offers high level of customization and integrations.

The platform should also provide warehouse management functionalities that expedite the pick & pack processes at the warehouse level without compromising the accuracy.

II. Location-Based Picking & Packing at Scale

A 3PL operation that relies on order value or time will run into several inefficiencies when it scales across serving geographically dispersed clients and customer orders. To mitigate this risk, the technology platform being used should have the capacity to use item location as a key input and not depend on executing the pick & pack process in isolation for each client.

III. Seamless and Transparent Invoicing

Ecommerce vendors prefer having visibility across the supply chain to develop systems that can reliably commit the delivery date. This is possible only when the eCommerce vendor has placed its faith in the 3PL company’s systems.

Invoice processing hence becomes central to the dynamic between the 3PL company and the eCommerce vendor. The 3PL company must ensure that the warehouse fulfillment and order invoicing processes are aligned but do not have dependencies. We recommend to explore OrderCircle’s Order Management Software, which offers advanced invoice management features.

The 3PL company should target creating manifests dependent on the arrival of the shipping partner’s pickup vehicle rather than preferential treatment of specific client orders. This creates uniformity in the data-sharing practices for the 3PL company and allows it to earn more trust by providing transparent invoicing, returns, and shipment commitments for the eCommerce vendor.

 

How to Identify a Value-Delivering 3PL Company as an eCommerce Vendor?

Price is often the deciding variable in locating a value-delivering 3PL partner. However, at a large scale of operations, what you need as an eCommerce vendor is a consistent performance, visibility of the system, and next to no room for errors. Here are three parameters you can use to gauge whether a prospective 3PL company will be able to deliver on your requirements or not:

I. Fulfilment System Uptime

Even if your 3PL partner is sitting on a different continent, the fulfillment platform should have 99.99% uptime. The very nature of eCommerce dictates that consumers can place an order at any given point in time. Gauging the 3PL partner’s capabilities using fulfillment platform uptime as a proxy will ensure you have absolute visibility across the fulfillment process lifecycle. Hence, you will have real-time data and intelligence reports available to help you take data-driven tactical decisions or evaluate performance.

II. Comprehensive Visibility Equals Transparency

Getting email notifications every now and then is not enough for your eCommerce operation. The ideal 3PL partner will provide you access to real-time data throughout the fulfillment lifecycle. You will be able to track forward and backward logistics processes, including orders and returns, at any given point in time. Explore OrderCircle’s Order Management Software, which offers customized dashboards and analytics to keep track of your operations. The technology platform should give you access to each overhead’s absolute breakdown in the invoice with an explanation of what process it is allocated towards. This will make sure no arbitrary or inaccurate charges are levied on your invoices.

III. Continuous Optimization of the Process

The baseline requirement is a system designed to eliminate inaccuracies. This can be achieved by the 3PL company using a mix of systematic functionalities and manual processes. For instance, the 3PL partner should conduct regular inventory checks and provide accurate data on availability. You should be able to triangulate your stock with net supply achieved by deducting order counts from the initial supply. Retail SKUs rely on this metric for ensuring data accuracy.

 

In Conclusion

As a 3PL company, your goal is to provide a seamless, consistent, and accurate set of warehousing and logistics services throughout the fulfillment lifecycle. As an eCommerce vendor, you must examine the platform uptime, visibility, and accuracy of the system your 3PL partner is operating on.

On both sides of the process, the fulfillment technology platform plays a decisive role. That is why the OrderCircle team has carefully engineered a set of functionalities that meet the fulfillment lifecycle’s inherent and latent needs for both eCommerce vendors and 3PL companies. You can generate automated invoices, keep a real-time check on the inventory levels, track the order without any human intervention, and access several other value-delivering functionalities trusted by over 200 businesses globally.

Explore OrderCircle, to know more about how it can add value to your 3PL or eCommerce operations.

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