With the 3PL industry experiencing record growth, competition is only getting stiffer. 3PL warehouses must stand out, and one way to do this is by leveraging timely data through a warehouse management system (WMS).
Data is the backbone of decision-making in modern logistics, including for 3PL providers. A WMS can provide actionable insights on everything from improving inventory management to increasing customer satisfaction, boosting a warehouse’s efficiency and profitability.
In this post, we will explore how data from a 3PL WMS can impact decision-making.
What is WMS for 3PLs?
A Warehouse Management System (WMS) is software that manages the supply chain workflow, from inventory management to fulfillment processes and integrations, giving 3PLs and their clients visibility into a warehouse’s daily functions.
By using WMS capabilities, 3PL providers can manage inventory control, improve order accuracy, and make better business decisions. Here are the key functions 3PL managers can take advantage of:
Inventory Management & Real-Time Tracking
WMS enables 3PL providers to track inventory levels in real time, ensuring accurate stock visibility across multiple warehouses. This helps businesses prevent stockouts, reduce excess inventory, and improve demand forecasting.
Order Fulfillment & Accuracy
With automated order processing, barcode scanning, and pick-and-pack optimization, WMS streamlines order accuracy and fulfillment speed. This reduces errors and returns and improves customer satisfaction.
Labor & Resource Optimization
With a WMS, 3PLs can allocate tasks based on workforce availability, reducing manual effort. The software optimizes warehouse layouts and picking routes, leading to faster processing times and cost savings.
Integration with Supply Chain Systems
A WMS integrates with Enterprise Resource Planning (ERP), Transportation Management Systems (TMS), and e-commerce platforms, creating a logistics ecosystem. This enhances supply chain visibility and ensures smooth data flow across all business functions.
Scalability & Flexibility
A WMS offers scalability for growing 3PL businesses by accommodating increased order volumes, new warehouse locations, and customer requirements. It provides 3PLs with the flexibility they need to adapt to market changes while trying to scale.
Data-Driven Decision Making
By collecting and analyzing warehouse data, WMS provides insights into inventory turnover, supplier performance, and order trends. This enables 3PL businesses to make informed decisions, optimize operations, and improve their services.
Why Do 3PLs Need Data?
Making decisions without data can lead to inefficient management, increased costs, and missed growth opportunities. 3PL analytics empower providers and their clients to make strategic decisions with confidence. They can improve inventory turnover, optimize warehouse space utilization, and refine labor productivity.
The impact on a 3PL’s profitability of even marginal improvements in any of those factors can be tremendous.
“If I can see how long a picker took to walk between locations,” says Don White, Senior Director of Solutions Engineering for Da Vinci, a leading WMS company, “I can change the slotting of items to decrease that walk time.”
“Do the math: If I save 2 minutes picking 20 orders in an operation, if 10 people are picking 500 orders a day and I’m saving them two minutes every 20 orders and I’m doing that over 365 days a year, now I don’t need as many people to pick.“
Data from a 3PL WMS also equips businesses with the tools to predict and prepare for market shifts or disruptions. By analyzing historical trends and real-time data, 3PLs can anticipate demand fluctuations, identify potential supply chain bottlenecks, and prepare for supplier delays or seasonal surges.
Example of How 3PL Data Prevents Stockouts and Reduces Costs
Imagine a 3PL provider managing order fulfillment for an e-commerce fashion retailer during Black Friday. Without accurate data, the 3PL provider might underestimate demand, leading to stockouts on high-demand items like winter jackets and holiday gift sets. As a result, customers experience delays or canceled orders, damaging the retailer’s reputation and resulting in lost revenue.
By leveraging data from their WMS, the 3PL provider can analyze past Black Friday sales trends, real-time inventory levels, and supplier lead times to predict demand surges. This allows them to replenish stock and allocate warehouse space efficiently. Also, labor productivity data helps 3PL providers schedule extra shifts and streamline picking routes, reducing delays in order processing.
Without in-depth insight into different 3PL WMS data, providers are prone to making decisions blindly and not knowing what is happening in the warehouse. Here’s how different WMS metrics affect key business decisions.
Key 3PL Metrics + Business Decisions They Drive
Inventory Turnover
Metric: The rate at which inventory is sold and replaced over a specific period.
Business Decisions: By analyzing turnover patterns, managers can establish optimal reorder points and safety stock levels while identifying slow-moving inventory before it becomes a cost burden. High-turnover items can be strategically placed in prime picking locations, while historical turnover data informs seasonal planning. Strong turnover metrics also provide leverage in supplier negotiations, allowing 3PLs to secure better terms based on proven performance.
Order Accuracy
Metric: Percentage of orders fulfilled without errors in picking, packing, or shipping.
Business Decisions: When error patterns emerge, managers can implement targeted training programs and redesign picking processes in problematic zones. This data guides investments in new picking technologies like RF scanning or pick-to-light systems. For high-error SKUs or during challenging periods, performance-based incentives can be structured around accuracy improvements.
Labor Productivity
Metric: Output measures such as orders picked per hour, tasks completed per shift, and units processed per worker.
Business Decisions: By analyzing these patterns, managers can optimize shift scheduling, identify top performers for leadership development, plan precise staffing levels for peak periods, and design fair, performance-based compensation systems.
Storage and Space Utilization
Metric: Percentage of available storage space being effectively used, including vertical space.
Business Decisions: Managers can time facility expansion or consolidation decisions and reorganize warehouse layouts for maximum efficiency. This metric can also guide choices between storage systems, from basic pallet racking to sophisticated push-back systems, and help establish optimal inventory levels. During peak seasons, this data becomes crucial for planning temporary storage strategies.
Dock-to-Stock Time
Metric: Time from when goods arrive until they’re available for picking.
Business Decisions: Schedule receiving staff based on arrival patterns, optimize dock layouts, and establish supplier compliance requirements for delivery scheduling. You can also identify opportunities for cross-docking and investments in receiving automation systems that could speed up the process.
Order Cycle Time
Metric: Total elapsed time from order receipt to delivery.
Business Decisions: The ultimate measure of operational efficiency and cycle time establishes realistic service level agreements with new clients. It also identifies workflow bottlenecks that require redesigning picking zones and routes, determines appropriate cut-off times for same-day shipping, and provides concrete data for selecting shipping carriers.
Factors to Consider Before Picking a 3PL WMS
When looking for the right WMS for your 3PL warehouse, there are certain factors to consider to help you make the right decision. Here is what to focus on:
Scalability and Flexibility
A 3PL WMS should be able to grow with the business and adapt to changing client needs. Whether managing seasonal demand fluctuations, expanding to new locations, or onboarding new customers with unique requirements, a flexible WMS allows operations to run smoothly without costly upgrades or downtime.
Integration Capabilities
A good 3PL WMS should integrate smoothly with key business systems, including Enterprise Resource Planning (ERP) software, Transportation Management Systems (TMS), e-commerce platforms, and supplier portals. Integration removes data silos and improves end-to-end visibility across the supply chain.
Real-Time Data and Analytics
Access to real-time data is necessary for making informed decisions. A 3PL WMS should provide real-time inventory tracking, order status updates, and performance analytics. This information enables 3PL providers to plan resource allocation, forecast demand, and improve customer service.
Multi-Client and Multi-Warehouse Support
Since 3PLs serve multiple clients with different storage, fulfillment, and billing needs, the WMS should support multi-client operations while maintaining accurate inventory reporting for each client. Also, if the provider manages multiple warehouses, the system should allow centralized control and visibility across locations.
Automation Features
Automation enhances productivity and reduces labor costs. Look for features such as barcode scanning, RFID tracking, automated picking and packing workflows, and AI-driven demand forecasting. These features help streamline operations, reduce errors, and improve order fulfillment speed.
Customization
Every 3PL has unique operational requirements. A customizable WMS allows businesses to configure workflows, reporting formats, and flexible billing, especially for multi-client 3PLs, to match their specific needs. This flexibility ensures that the system aligns with business goals rather than forcing rigid processes.
User-Friendliness and Training Support
An intuitive interface and dashboard reduce the learning curve for warehouse staff and enable them to start using the tool as soon as possible. A WMS with comprehensive training resources and customer support will also ensure easy implementation and ongoing usability, ensuring no disruptions in daily operations.
Compliance and Security
A WMS must comply with industry regulations and security standards, especially when handling sensitive client data and financial transactions. Look for systems with robust cybersecurity measures, data encryption, and compliance with standards such as GDPR, SOC 2, or ISO 27001.
Cost and ROI
Evaluate the total cost of ownership (TCO) for the WMS, including licensing fees, implementation costs, training expenses, and potential customization charges. This will give you an idea of the ROI based on how the WMS improves efficiency, reduces errors, and enhances customer satisfaction to justify the expense.
FAQs
What is 3PL WMS?
A 3PL WMS is a tool that helps 3PL providers manage their warehouses efficiently while providing storage, inventory, and order fulfillment services for multiple clients.
What to look for in 3PL WMS?
Look for scalability, multi-client support, real-time visibility, easy integration, affordability, cloud-based capabilities, and advanced analytics.
What is the best WMS for 3PL?
The best WMS for 3PL providers should streamline and optimize all warehouse operations and be easily accessible, easy to implement, and use. Da Vinci’s cloud-based WMS allows you to manage your warehouse from anywhere, making it easy to make timely decisions on the go.
Making Smart, Data-Driven Decisions with WMS
Leveraging data from your WMS is a necessity for staying competitive in the 3PL market. From streamlining inventory management to enhancing customer satisfaction, WMS data empowers 3PL providers to make informed decisions that drive efficiency and profitability. By embracing data-driven strategies, businesses can proactively address challenges, optimize operations, and capitalize on new opportunities.
Take your 3PL operations to the next level with Da Vinci’s powerful WMS solution.
This cloud-based 3PL Warehouse Management System (WMS) offers advanced features that streamline workflows, boost efficiency, and enhance overall supply chain management.
With real-time tracking and data analytics, Da Vinci WMS gives you complete visibility into your warehouse operations. This helps you make informed decisions about inventory, labor, and order management.
Book a demo today and discover how our advanced tools can transform your decision-making and help you achieve your business goals.