The last year has been a challenge for many Third-Party Logistics (3PL) businesses due to increased consumer demand, paired with constant disruptions in the supply chain and significant warehouse labor shortages.
The good news for 3PLs is that this challenge is an opportunity. And the logistics companies that can figure out how to seize the day’s opportunities will be the 3PL powerhouses of tomorrow.
The biggest problems 3PLs are facing right now are:
- How can you meet ever-increasing demand and grow and scale your business with the labor you’ve got right now?
- How do you know when it’s time to implement a Warehouse Management System (WMS) for your 3PL business?
The answers to these questions are easier to find than you might think.
Let’s dig into the six signs it’s time for your 3PL business to implement a WMS.
Sign 1: Your Picking Error Rate is Too High
The picking error rate for the average warehouse or a 3PL facility generally ranges from 1% to 3%, which is a major problem for 3PLs seeking to increase their productivity and bottom line.
Even a 2% error rate, which is widely regarded as the industry standard, spells significant trouble for your logistics company, and it only gets worse as your business grows.
A high picking error rate can decimate your bottom line. Mis-picks are estimated to cost a company a whopping $100 per order and can cost your 3PL hundreds of thousands, or millions of dollars each year.
Picking errors not only drive down customer satisfaction rates, but they also have a significant multiplying impact on your revenue losses. And, if your customers are beginning to lose faith in your 3PL because your picking error rate is too high, it’s only a matter of time before they seek a more accurate logistics partner elsewhere.
Mis-picks create wasted labor costs and unsellable inventory. Plus, turnover hurts your top line, and credits on handling fees hurt your bottom line.
Paperless picking with built-in scanning (QC) ensures your staff picks and packs the right item for your clients every time.
Benefits of a WMS
- Lower your picking error rate
- Cut hundreds of thousands or millions of dollars in mis-picking revenue losses
- Improve your client and customer satisfaction
Sign 2: You Can’t Meet Customer Demand
If the recent labor shortage has made it more challenging than ever for your 3PL to find and hire new employees, you’re not alone.
According to the 2021 Inbound Logistics Perspectives: 3PL Market Research Report, 47% of shippers and 73% of 3PLs report that finding, training, and retaining qualified warehouse labor is one of their biggest challenges.
Is your 3PL struggling to meet customer demands for fast shipping and fulfillment without adding more staff (if you can even find qualified new hires) or paying overtime rates?
Consumer demand for products is expected to remain high over the next year, which means your fulfillment company is likely at a crossroads. You’ll either have to compete for the same warehouse employees every other 3PL is fighting for, driving your costs up, or find a better solution.
To shorten your pick time by up to 80%, without the need to add new staff, utilize a WMS that includes features such as SkuVault’s paperless Wave Picking and item location.
This can help your current staff not only move through the warehouse more efficiently but also pick items more quickly and accurately as well.
Benefits of a WMS
- Cut your pick time by up to 80%
- Reduce your warehouse staff needs
- Increase profitability through efficiency and accuracy
Sign 3: Customers Cannot View Inventory Quantities
Your customers demand a way to view the inventory quantities they have in your warehouse, which means you’re regularly required to execute the labor-intensive process of creating and sending spreadsheets every month, or after big swings in inventory quantity.
Manual inventory reporting isn’t scalable and doesn’t meet your client’s needs and demands for real-time visibility of their stock levels and most popular products, as well as other Key Performance Indicators (KPIs).
This outdated inventory reporting method is costing your company time and money, not to mention the numerous opportunities for errors along the way.
Additionally, with all the manufacturing and supply chain delays in recent years, it has become more critical than ever for your customers to have a birds-eye view of their inventory, shipping, and trends.
Provide a client portal to your customers r to give them 24-7 access to their data in real-time. This not only saves your 3PL time and labor but also enables your customers to monitor their own inventory quantities and builds trust with them through transparency.
From inventory reports to the fully-customized KPIs (Key Performance Indicators) that matter most to your clients, a WMS gives you and your customers the data you need to keep your business running smoothly and efficiently.
Benefits of a WMS
- Real-time inventory reporting portal for each customer
- Build trust with customers
- Lower labor costs
Sign 4: Your Inbox is Flooded With Customer Questions
Your clients have no visibility into their transaction history or item location. Consequently, your email inbox is constantly flooded with customer questions about their current stock levels, as well as inquiries related to their picking fees and storage costs.
Or they’re irritated because it took three hours for you to respond to a question they needed an answer for right away.
In addition, because your clients have different needs and directives, they often need different customization options.
As your business grows, more customers mean more emails. They need more transparency, and so do you.
Simplify your monthly billing, save time, and streamline communication with your customers by allowing them to easily find the answers to their own questions with clear, powerful, exportable reporting, like SkuVault’s Transaction and Audit reports.
Benefits of a WMS
- Reduce time spent answering customer questions
- Allow customers to “self-serve” and get the answers they need more quickly
- Improved customer service
Sign 5: Not Enough Time To Train Temporary Staff
The good news is that your 3PL business is growing rapidly. The bad news is that you needed to hire low-skill or temporary workers yesterday, and you’re stretched so thin right now that you don’t have the time or manpower to train or onboard them.
Effective training is an investment in the future of your 3PL business. According to research by Louis Harris & Associates cited in a recent Inc. Magazine article, 41% of companies with ineffective training programs lose employees during their first year of service.
Many 3PL owners assume that once employees are trained, they’ll take their new knowledge to their competitors in search of better opportunities, but in reality, the opposite is true. Trained staff members are not only happier and more productive, but they’re also more likely to stay at your company if given the opportunity.
Save time and money by implementing a WMS with fast and intuitive software training to get your new warehouse staff producing in as little as one day with SkuVault Fast Track.
Benefits of a WMS
- Save labor with software training
- Get new hires working as soon as Day 1
- Save money by streamlining training
Sign 6: You Want a WMS, but Every 3PL Solution Is Too Expensive
You already know that your 3PL business needs to implement a WMS to grow and scale, but you can’t seem to find an option that won’t break the bank.
Some WMS providers charge thousands of dollars per month in licensing and other added fees for integrations and other omnichannel add-ons, such as Shopify stores. Others charge extra for key features, such as barcode printing. (Yes, that one has us scratching our heads as well.)
Choose a WMS solution with simple, straightforward, and transparent pricing. SkuVault’s “everything’s included” subscription means the price you see is the price you pay, with no nickel and diming over the features your business needs, including integrations, reporting, and barcode printing.
Benefits of a WMS
- Increases picking accuracy
- Cuts pick time by 80%
- Decreases labor costs
- Software training gets new hires working faster
- Improves customer service and transparency
- Customer portal and self-serve reporting
- Increases revenue and improve efficiency
- “Everything’s included” pricing
If you have answered “yes” to two or more of the six signs, it’s time to implement a Warehouse Management System for your 3PL business. Your company is ready to upgrade.
As you prepare to grow and scale your business in the coming year, a WMS such as SkuVault can help you to significantly ease growing pains, decrease your labor expenses, increase your 3PL’s efficiency, and boost your bottom line.