Today businesses routinely outsource their logistics to third-party warehouse operators, or 3PLs. In fact, 83% of businesses and 90% of Fortune 500 companies work with 3PL providers, and most of those arrangements involve shared warehousing, in which the 3PL manages the inventories of multiple businesses under one roof.
But shared warehousing comes with challenges for 3PLs such as meeting diverse client expectations. You need smarter solutions to manage multiple logistics and optimize warehouse operations (storing, picking, and packing).
In this article, we’ll explore shared warehousing advantages, industry-specific solutions for 3PLs, and how Da Vinci’s WMS optimizes inventory, labor, and order fulfillment.
Benefits of Shared Warehousing
Traditionally, companies would buy or lease dedicated warehouses to store inventory and fulfill orders. But with online shopping and globalization, traditional warehouses often lack the resources to keep up with demand.
Here are some shared warehousing advantages for businesses:
- Cost savings through resource sharing: Sharing a warehouse allows businesses to split costs for labor, equipment, maintenance, and technology.
- Flexibility to match business needs: Companies can rent pallet spaces based on their inventory needs without paying extra costs.
- Built-in scalability: Businesses can rent spaces closer to end customers at new locations, test new markets, or adapt to market demand changes.
3PL providers offer industry-specific expertise, advanced technology, and critical resources such as trained workers or logistics frameworks in a shared warehousing setting.
But managing multiple clients can often get complex due to specific storage requirements, inventory inaccuracies, picking errors, or order fulfillment conflicts.
How Shared Warehousing Challenges 3PLs
3PL providers have to balance multiple inventories, distribute labor tasks, track every item’s movement, and keep each client in the loop.
On top of that, each client has different storage needs, fluctuating demand, and high customer expectations. It’s like trying to solve a puzzle where the pieces keep changing.
According to a survey, cutting costs, getting new clients, and warehouse efficiency are the top difficulties 3PLs face. Mistakes in picking or inefficient storage reduce productivity, directly impact the bottom line, and erode client trust.
That’s why a 3PL warehouse management system is crucial. It provides end-to-end solutions to organize inventory, track every move, and speed up order fulfillment. A WMS gives full control with real-time visibility on inventory and customer accounts, all from a single, reliable platform.
Key Features of a WMS for Shared Warehousing
Here are some WMS features that can benefit 3PLs:
Real-time Inventory Tracking
Cloud-based WMS platforms provide real-time tracking with permission-based customer account profiles. It allows clients to monitor stock levels, space utilization, and item placements. For example, a client can quickly check what’s in stock and where it’s located, all through the WMS.
For 3PLs, this ensures complete visibility across all clients while enabling smarter decisions—like how to group orders, choose the best picking method (batch, wave, or zone), and optimize time spent on order fulfillment.
Labor Management
Labor takes over 40% of total costs for 3PLs. A WMS can track workload, distribute tasks evenly to avoid overwork or idle time, and provide real-time instructions to workers for picking, sorting, and packing.
Da Vinci’s WMS uses algorithms to analyze SKU demand, prioritize orders, and optimize picking routes to help workers and improve productivity.
It can also assign high-demand items to locations near picking zones or on lower shelves. This reduces worker strain and minimizes the risk of injuries.
Data-Driven Forecasting
In shared warehousing, 3PLs need data-driven analytics for better decision-making, storage organization, and task allocation. A WMS uses predictive analytics, algorithms, and artificial intelligence (AI) tools to analyze historical trends, customer behavior, and operational performance.
Client Dashboards
A WMS allows clients to view dashboards, inventory levels, and billing information in real time. This easy access to key information, such as order tracking and specialized labeling requirements, is also an important selling point for getting new clients.
Industries Leveraging Shared Warehousing with WMS
Here’s how shared warehousing with WMS simplifies inventory management and order fulfillment:
E-commerce
E-commerce companies have high SKU variability and seasonal demand. Shared warehousing helps 3PLs meet these challenges by using WMS for:
- Predictive analysis to forecast demand and avoid stockouts.
- Real-time inventory tracking for accurate order fulfillment.
- Optimized picking and packing, minimizing errors and delays.
According to eMarketer, the e-commerce industry is expected to hit $8 trillion by 2027. As the industry grows, 3PLs can leverage WMS to handle complex operations, fulfill orders faster, and attract larger e-commerce clients.
Food and Beverage
The food and beverage sector demands rapid turnover and strict storage protocols. Shared warehousing with WMS helps 3PLs:
- Adjust storage space dynamically based on product-specific needs.
- Assign items closer to picking zones or transfer perishable goods directly to outbound trucks for faster processing.
- Use smart algorithms to minimize waste and maintain freshness.
This creates opportunities for 3PLs to cater to an industry predicted to grow $4.32 billion by 2029. The WMS can provide end-to-end solutions to meet quality standards and gain more clients.
Wholesale
Wholesale distributors need smart solutions to store and ship bulky items. This creates an opportunity for 3PLs to provide shared warehousing solutions that address these needs. With shared resources and advanced planning, wholesalers can:
- Access shared infrastructure: Use resources like forklifts, shelving, and loading equipment without the burden of full ownership.
- Lower operational costs: Reduce capital investments by sharing the expenses of warehousing infrastructure.
- Maximize space efficiency: Leverage advanced WMS tools to plan and optimize storage layouts for bulky goods.
As wholesale distribution adapts to changing market demands, 3PLs can leverage shared warehousing with WMS to deliver cost-effective and scalable solutions.
Da Vinci’s cloud-based solutions and AI-powered optimization capabilities unify shared warehousing elements. This allows 3PLs to cater to multiple clients from various industries by organizing inventory, tracking each item, and improving picker accuracy.
Future Trends in Shared Warehousing
As customer demands increase, more companies will onboard shared warehouses with 3PL expertise to manage their inventories and logistics.
But to keep up with these demands, warehouse operators need to rely on the right technology to stay ahead and handle each client’s needs.
Here are some technologies shared warehouses already use but will advance in the coming years.
- Internet of Things (IoT) Integration: Warehouses use IoT devices for inventory tracking, smart shelving, and equipment performance monitoring. Future sensors and wearable devices, like smart glasses, will assist in every aspect of warehouse operations with a high level of precision. Warehouses will need cloud-computing solutions like cloud-based WMS to manage huge amounts of data for security, analysis, and storage.
- Blockchain Technology: Warehouses will use a decentralized ledger system to record and trace inventories while making relevant data accessible to multiple clients. The cryptography used in blockchains will reduce risks of counterfeiting, fraud, and cyber attacks.
- AI and Machine Learning: AI tools currently assist in demand forecasting and space optimization. In the future, machine learning algorithms will further automate decision-making processes to meet market demands.
- Robot-run Warehouses: Currently, only 10-15% of warehouses use robotics. In the future, warehouses will be completely robot-run. Automated guided vehicles (AGVs) and collaborative robots (cobots) will take on more dynamic roles, including decision-making and process optimization.
How Da Vinci’s WMS Simplifies Shared Warehousing Processes
Da Vinci’s WMS uses algorithmic optimization capabilities to simplify the complex operations required for shared warehousing. Our software tailors your inventory storage to save space and meet multiple client demands. It guides workers with step-by-step directions to place and pick items, especially during peak seasons.
Da Vinci’s predictive analytics allows you to navigate through shifting market trends, make better use of your automated and manual systems, and meet compliance standards across multiple industries.
Here’s how Da Vinci’s WMS supports shared warehousing operations:
- Custom documentation and labeling: The software generates client-specific labels and documentation to ensure clarity and accuracy in all transactions.
- Organized multi-client storage: It allows you to manage multiple inventories with clear boundaries for each client, eliminating confusion and errors.
- Optimized picking paths: You can place high-demand items near picking zones and provide real-time guidance to workers, speeding up order fulfillment and reducing mistakes.
- Effective task assignment: You can allocate labor based on order priorities and workload, ensuring higher productivity and fewer delays.
Learn more about how Da Vinci’s WMS can assist you with shared warehousing. Contact our team today.