3PL Fulfillment Software: Accelerate Performance & Reduce Cost

Order fulfillment activities are no longer a backend operation, but a frontline differentiator. Modern day 3PL vendors have to keep up with changing client expectations, complex fulfillment operations, and emerging market risks. These challenges can become a roadblock to scalability and hinder growth. Overcoming these challenges while maintaining SLAs is no longer sustainable without innovative solutions. 

Advanced technologies like 3PL fulfillment are helping businesses to overcome these hurdles. Modern 3PL fulfillment solutions are designed to streamline end to end operations. Lets understand the key capabilities, challenges, and benefits of smart 3PL tools. 

3PL fulfillment software is a cloud based technology that enables supply chain and logistics companies to manage, automate, and accelerate end to end activities like good distribution, warehouse administration, order fulfillment, and carrier coordination. 

Compared to on premise or traditional solutions, cloud based 3PL software seamlessly integrates  with other platforms that include e-commerce platforms like Magento, Shopify etc., Warehouse Management Systems, Transportation Management Systems, CRM, PoS solutions and more, offers enterprise grade compliance, and easily scales with shifting demands. In addition, cloud based tools reduce cost in the long run as they offer subscription modules rather than one time purchase.

The explosive growth of e-commerce in the past two decades have led online platforms to battle for the spotlight of customer attention. Shifting customer purchase behavior is adding pressure on 3Pl services to keep up with these evolving needs and challenges. Some of these are: 

Fragmented Warehouse and Inventory

One of the key challenges in enterprise 3PL is managing clustered, siloed warehouse operations across multiple locations with distributed data and process. Fragmented systems lead to communication gaps among departments and external partners. 

This lack of interconnectedness across processes leads to poor visibility into critical activities like order progress and supply chain operations. For example, the receiving department may lack data of inventory levels of another section, causing significant delays and unprecedented errors. 

Labour shortages and rising costs

As labour costs are increasing exponentially, 3PL vendors are struggling to manage financial, operational, and strategic dimensions. 

Labour is not an optional investment for modern 3PL fulfillment businesses. Shortage of skilled labour creates a ripple effect across operations like forklifting, picking, and logistics coordination. When staffing levels drop below basic operational requirements, it creates bottlenecks, leading to inefficiencies, quality issues, service delays, and pressure on existing staff, especially during peak seasons.  

For contract based 3PL providers, spiking labor expenses can compromise profit margins unless they are contractually obligated to adjust rates based on labour market indices. These challenges are forcing 3PL vendors to invest in smart automation technologies like fulfillment software to reduce manual dependencies. 

Manual Load Planning & Order Routing

Despite the growing trend of cloud adoption by 3PL vendors, a lot of processes around order routing and load planning are still largely manual, especially for vendors using traditional, outdated technology. 

Manual or semi automated processes increase the total time to complete delivery cycles. Moreover, non digitized workflows have a higher rate of errors compared to automated systems as humans are far more likely to err. Digitizing and automating routing and planning operations are key to increase fulfillment efficiency and optimize costs. 

Rising Client Expectations & SLA Penalties

The rapid shift of purchase behavior from an in store to online model introduced a number of unforeseen complex challenges. Same day delivery, managing return requests, processing refund on time, and demand for faster fulfillment are shaping the 3PL landscape. Managing these efficiently is a key differentiator of successful 3PL vendors. 

Many warehouse management systems, especially legacy or on-premise solutions are not built to handle such complex edge cases in demand. This can lead to processing delays, fulfillment errors, and SLA (Service Level Agreement) violations.

Inadequate Capacity to Deliver

As 3PL businesses scale, new processes, higher order volumes, new warehouse categories, and shipping routes are added to the daily operations. While these are incumbent to growth, it adds unforeseen risks and an unprecedented number of complexities in the workflows. 

Without hiring new resources, growth becomes stagnant - especially for vendors carrying out activities manually or legacy systems. Lack of automation leads to higher cost per order and inefficient peak management. For example, holiday seasons, flash sales, or client onboarding can lead to sudden surge in demand, leading to significant delays without additional resources. 

Complexity in integrations

System integration is also a common stumbling block. 3PLs often need to connect their WMS/IMS to clients’ ERP systems, eCommerce platforms, and shipping carriers to function without any roadblocks. 

These integrations vary in complexity, and when done poorly, they can cause miscommunication, duplicated data, or lost orders. Ensuring seamless, real-time integrations requires technical resources that many 3PLs struggle to maintain.

Third party logistics offer an array of capabilities to streamline your end to end activities. Your 3PL software should have these key capabilities: 

Real Time Order Orchestration & Tracking

Modern 3PL activities involve addressing a number of issues and edge cases across the order fulfillment cycle. As the volume of orders increases, 3PL fulfillment companies should be equipped with the tech stack to automatically determine the right warehouse, inventory source, and fulfillment path based on speed, cost, and SLA commitments. 

Instead of waiting for batch processing or manual intervention, the 3PL system evaluates each order as it comes in to determine the fastest, most cost-efficient path to fulfillment. This feature is especially useful to handle high-volume sales, flash events, or peak-season surges.

For example, let's say a customer from city A places an order and you have inventories in Dallas and New Jersey. Real time order orchestration ensures it gets shipped from the closer warehouse to reduce shipping time and cost without the need for manual intervention.

Dynamic Slotting, Picking & Packing Optimization

For 3PL fulfillment software vendors, time is a critical metric for success. If pickers spend a long time walking to find the right item or reach for the wrong item more often than desired, it can negatively impact your throughput and margin. 

Smart 3PL fulfillment software companies use dynamic slotting to automatically reassign storage locations for goods. It leverages real time data like velocity, seasonality, and SKU (stock keeping unit) popularity. 

Based on the order profile, 3PL software should group similar items to help warehouse staff reduce walking distance based on zone picking, batch picking, or wave picking. Using smart logic and machine learning, it can suggest ideal box size, filler, and bundling strategy based on item dimensions and fragility to reduce packaging waste and optimize shipping cost. These capabilities help 3PL vendors to boost labor efficiency and throughput in complex warehouse environments.

Automated Carrier Allocation & Label Generation

One of the most critical features of a 3PL fulfillment software, automated carrier allocation and label generation capabilities significantly cuts down cost and saves bandwidth. Automation speeds up the fulfillment process, resulting in an error free and cost effective process. This way, instead of toggling between package delivery providers, the software can select the best suitable shipping option for orders based on rates, delivery time, and SLA requirements. 

Smart 3PL platforms automatically generate the right label along with the necessary custom documents with speed and precision. Automated label generation reduces human errors like mislabeling - a common risk in supply chains that cause unwanted delays. 

Robust 3PL tools allow users to customize the dashboard to prioritize local carriers, adjust services based on weight of the goods, distance to final destination, and client preferences. 

Growing 3PLs handling high volumes of shipments on a regular basis must invest in smart automation to accelerate throughput, reduce labor costs, and consistently meet client expectations. 

Inventory Sync & Returns Management Across Facilities

Another must have feature for third party logistics is comprehensive visibility into every activity, from the point of origin to final destination. 

If inventory data is not updated in real time, vendors risk stockouts, overselling, shipping delays, dissatisfied clients, and poor decision making - all leading to a compromised bottom line. 

The inventory sync feature ensures that systems across online stores, marketplaces, and client dashboards are always updated with the latest information. Whenever products are received, picked, or delivered, it is instantly recorded in the system log and synced across sales channels to prevent overselling or phantom stock. Additionally, clients can view the live status of their order instead of an inventory snapshot. 

A robust return management functionality equips 3PL vendors with the ability to manage reverse logistics frictionlessly. Once the return request hits the systems, the tool should auto generate labels, determine if it’s restockable, route it correctly, or flag it for quality checks. 

Integrated Client Portals and Dashboards

Apart from the vendor system, 3PL fulfillment software should also allow customers to track the progress of their purchase as soon as it completes a point in the journey. Real time visibility across clients and channels is the key driver to making informed decisions as and when issues arise. 

White labeled dashboards enable clients to have better controls over their fulfillment operations. Automating the support and query system helps them manage issues without having to ping the internal team. 

The client portal should allow users to track inventories in real time across warehouses, view order progress, view shipping history, manage returns and refunds, submit support requests, and configure custom settings. 

3PL solutions offer a plethora of benefits for businesses of all types and sizes. If you are still using on premise or legacy systems, here’s why you should consider shifting to a cloud solution: 

1. Improve fulfillment accuracy and speed by up to 30%: 3PL tools eliminates the need for manual decision making using rule based automation, dynamic picking routes, and real time order orchestration. AI driven automation helps to ensure better quality of service and higher throughput without increasing resource headcount. Overall, businesses can improve fulfillment accuracy and speed by at least 30%. 
2. Lower labor and last-mile costs by 15 - 20%: Given that labour is the largest expense warehouse factor, 3PL fulfillment software can significantly cut it down by automating repetitive, error prone activities. Features like route optimization, exception handling, predictive analysis, invoice generation, and payment processing boosts overall performance without increasing expenditure. Overall, businesses can reduce labour and last mile costs by 15 - 20%. 
3. Enable faster onboarding of new clients or SKUs: Smart 3PL solutions offer the ability to templatize setup, map SKUs, create inventory intake rules, and manage access to portals. It eliminates the need for manually uploading CSVs though native API integrations. Clients get immediate access to the dashboard and full visibility into inbound or outbound movements. 
4. Strengthen SLA compliance and contract retention: Subjective conversations around performance creates friction with clients and increases negotiation time. 3PL businesses need a system to track shipment time for each order, flag risky SLAs, and automatically generate comprehensive compliance reports. This helps to ensure accountability and maintain transparency throughout the contract term. 
5. Scale exponentially without slowing down: Modern 3PL tools are designed to meet a wide range of business use cases without slowing down daily operations. It offers the flexibility to support multiple client verticals simultaneously without needing to build custom workflows. Built-in integrations facilitate the real time order flow and unified inventory across channels. As clients increase their sales channels, 3PL systems scale effortlessly to support their growing needs across new markets and SKUs. 

3PLs can no longer afford delays, manual errors, or siloed systems. The right fulfillment software helps you meet today’s demands without compromising scalability. 

Today, it is helping hundreds of enterprises to drive sustainability by optimizing routes to reduce fuel consumption and emissions. Its returns management system simplifies reverse logistics with real-time tracking and customer-friendly workflows. 

FarEye enhances pre- and post-purchase experiences through proactive communication, accurate ETAs, and delivery personalization. Its multimodal tracking offers end-to-end visibility across transport modes. The platform’s transportation management platform improves fleet utilization, reduces costs, and ensures on-time deliveries across primary and secondary distribution.

FarEye brings fulfillment agility, cost efficiency, and enterprise scalability in one platform for unparalleled agility and frictionless delivery experiences.