When companies look to partner with a third-party logistics (3PL) provider, they might say that they’re looking for a ‘warehousing partner.’ In reality, the modern warehousing partnership involves much more than traditional warehousing (i.e., storage of products) – it involves warehouse inventory management to support robust B2B and/or B2C operations.
At the heart of these capabilities is the 3PL’s warehouse management system (WMS). In this article, we’ll take a closer look at the WMS and the benefits it can bring to your operation.
What is a WMS?
A WMS is software that performs a variety of functions related to goods arriving to the warehouse; goods stored within the warehouse; and goods leaving the warehouse. Its basic capabilities include:
- Warehouse inventory management: The WMS manages key characteristics like product location, on-hand quantity, pallet ID numbers and, where applicable, lot number, serial number, and/or expiration date. This information can be accessed in real-time by the 3PL’s warehousing customers.
- Order management: Shipment status, parcel tracking information, and other information can be viewed – and is automatically updated – within the WMS.
- eCommerce pick and pack: The 3PL can design the most effective picking pattern so that associates reduce walking distance and overlap, and therefore minimize labor costs. Associates then follow the packing instructions generated by the WMS and affix the shipping label (also WMS-generated).
Additional benefits of using a 3PL’s WMS
In addition to its common capabilities as listed above, many WMS systems are almost endlessly adaptable and customizable – providing 3PL customers with many benefits.
- Avoid systems investments: While the capabilities of WMS systems are indispensable to modern businesses, they do come with a hefty price tag. A full system for warehouse inventory management, eCommerce, and order/shipment management can cost anywhere from the low five-figure range to well into six-figure territory. 3PL customers can largely avoid this cost by paying only for the WMS resources they use. Some 3PLs, like Kanban Logistics, do not charge customers for WMS usage and instead charge only for related labor (e.g., the labor involved with pick and pack).
- Ability to support integrations: The WMS can integrate with a 3PL’s other platforms (e.g., transportation management systems [TMS]) and with external software platforms via electronic data interchange (EDI). This includes eCommerce platforms such as Amazon, Shopify and Magento, so that orders placed on those platforms feed directly into the WMS. Subsequent actions by the 3PL (e.g., shipping) are then reported by the WMS back to the eCommerce platform. The WMS can also integrate with carrier portals (e.g., FedEx, USPS and UPS) for real-time shipping updates.
- Ability to customize stock rotation and handle recalls: 3PL WMS systems enable each of their customers to follow their chosen stock rotation protocols (e.g., FEFO, FIFO). For food and pharmaceutical companies, the WMS is a key component of product recalls – whether real or mock. In the event of such a recall, the WMS will assign the flagged items to a segregated hold location and prevent them from being distributed.
- Just-in-time capabilities: 3PLs like Kanban that specialize in just in time arrangements with manufacturers lean on their warehouse inventory management systems to streamline the process. For example, if a 3PL stores raw materials for a manufacturer, it will be notified by the WMS whenever an order is placed requiring those materials. The 3PL can then immediately supply the manufacturer so that the final product can be produced.
- Custom reporting: WMS systems not only perform an almost endless array of functions, they can report on them too. From standard stock reports to fully-customized KPIs that matter most to your stakeholders, the 3PL WMS can give you the reports you need when you need them.
- UCC-128 label support: Most WMS systems can handle retailer UCC-128 labeling for all major retailers including Walmart, Target, and Costco.
Lean on Kanban’s WMS for inventory and much more
3PLs enable retailers and manufacturers to compete more effectively using an agile, asset-light logistics model. Companies leverage the 3PL’s physical infrastructure (warehouse network) and the systems infrastructure (full-featured WMS and TMS systems) to support growth without investing to purchase and support this infrastructure. In this way, logistics costs parallel the company’s revenue stream. To learn how you can put Kanban’s infrastructure to work for your operation, contact us today.