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operational costs for 3PLs

Can Integrated Technology Reduce Operational Costs for 3PLs? 

Integrated technology is changing the way third-party logistics (3PL) conduct business. Tech-centric 3PLs streamline processes through all stages of the supply chain, including e-commerce fulfillment, warehousing, picking, packing, and shipping. They integrate data from multiple sources creating a powerful network where information is shared, making the entire lifecycle of an order completely visible to merchants. This clever blending of technology creates an end-to-end supply chain solution that has a noticeable impact on operational costs for 3PLs

Labor Costs 

Integrated technology automates workflows to optimize how each team member uses their time. It directs processes to reduce human error and calculates the most direct pick routes to reduce time. When picking time is reduced, more orders are processed, and less money is wasted on error correction. Also, you eliminate the need for temporary staffing and overtime. 

Supervisors use real-time analytics to maximize output and understand staffing needs based on orders and scheduled deliveries. Automated processes also reduce training time as there are fewer touchpoints to worry about. Through integration with other platforms, including e-commerce and ERPs, there is minimum manual communication required between online stores, vendors, manufacturers, managers, and warehouse staff. 

Automatic alerts are used through each step of the process, from order alerts to mispicks, and replenishment levels to picking routes.  These alerts serve as triggers for logical next steps. 

There are also downstream efficiencies, not only in inventory replenishment but also in returns. Data entry errors are reduced when manual entry is eliminated. Orders become more accurate, and errors that lead to time-consuming tasks such as returns and duplications are also reduced. Integration also allows systems to talk to each other, which also reduces errors and duplication. 

Finally, integration creates transparency throughout the picking, packing, and shipping stages to spot errors and increase accuracy. 

Transportation Costs 

Shipping is a major cost concern with 3PLs. However, integrated software allows 3PLs to manage shipping routes to reduce the distance a package travels. The system makes decisions based on the location of the customer and the closest fulfillment center and then sends the order to the closest warehouse. The same system helps improve inventory allocation based on order frequency at each distribution center to eliminate the need for transfers and guesswork. 

Insights on transportation can be shared, including: 

  • Peak fulfillment times 
  • Revenue of orders shipped by day 
  • Sales by channel 
  • Sales and quantity of orders by zone 

Inventory Management 

Inventory protects businesses against supply and demand fluctuations. With an integrated system, you and your clients avoid increased costs associated with overly large safety nets, ensuring you always have enough inventory to meet need. Overstocked warehouses increase costs through space wastage and transportation, eating into money better used elsewhere. When you optimize inventory, you optimize warehouse space. 

Supply Chain Costs 

Integrated technology presents opportunities to save money throughout the supply chain, including: 

  • Inventory ordering processes: A streamlined ordering process using integrated technology provides real-time numbers making it easy to order the right amount of stock. Integration also enables automated approvals with vendors, sending inventory requisitions to the appropriate person. 
  • Inventory management: Introducing just-in-time (JIT) systems can reduce costs by ordering on a needs basis. JIT reduces unused stock taking up valuable warehouse space to eliminate overhead and carrying fees. 
  • Monitor orders: Monitoring orders identifies patterns and trends to make quick decisions throughout the supply chain. 
  • Space optimization: Reporting and analytics provides a realistic look at how space is used and compares it to the inventory in the warehouse. You can also gain insights on space expansion using vertical storage to take full advantage of space. You make smarter decisions that decrease losses related to poor warehouse management. 
  • Performance: Tracking performance across the entire supply chain allows you to see cost reduction opportunities. Instead of setting and forgetting your supply chain, you continue to see where you could improve results based on performance at each level. You can set benchmarks based on KPIs. You also become better at forecasting for essentials, including logistics, stock renewals, transportation costs, etc. 
  • Carrier fees: Rate shopping of small parcel carriers helps reduce freight costs through integrated technology. By utilizing rate shopping software, businesses can compare shipping rates from multiple carriers and select the most cost-effective option for each shipment. This technology allows businesses to easily track packages, manage invoices, and optimize shipping methods, resulting in significant cost savings. 

Integrated technology automation and reporting facilitate improved efficiencies and reduced costs. 

It all boils down to having the right technology to streamline processes and reduce operational costs for 3PLs. Integrated technology leverages the best of the best, allowing you to take full advantage of leading-edge features. 

VeraCore Arrows

VeraCore is SaaS order and warehouse management software trusted by top fulfillment companies and 3PLs. Affordable, flexible, easy to use; VeraCore is everything you need to keep clients happy and run a lean operation.

With VeraCore, you can grow your business and handle any challenge with ease. Rules-based automation enables you to control all aspects of your warehouse operation and satisfy each of your clients’ unique requirements.

Hundreds of fulfillment service providers and 10,000+ fulfillment clients place VeraCore at the “core” of their business to get the job done right, for over 40 years.

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