How Can 3PL Fulfillment Software Supercharge Logistics?

In the beginning, retailers' revenue growth was largely limited by square footage: How many SKUs, how many facings, plus average sale and foot traffic minus COGS and overhead. The internet may have broken that time-tested brick-and-mortar equation, but it also opened up vast new opportunities.

While those not burdened with a lease seemed to have the advantage at first, brick-and-mortar retailers who've embraced e-commerce are finding ways to come out on top. Logistics partners and 3PLs help them compete with e-comm-only sources head to head.

Adding a 3PL partner means retailers can expand sales without regard to square footage or foot traffic and without increasing their overhead, as the cost of the vehicles, drivers and even warehousing can be outsourced and paid on an as-you-go basis. 

Whether you’re a 3PL or a retailer, two keys to making this relationship work are finding the right partners and the right 3PL fulfillment software.

What Does 3PL Mean?

3PL stands for third party logistics. In supply chain management and logistics, 3PL refers to an organization's use of other companies to outsource warehousing, distribution, delivery, and other logistics services.

Who Uses 3PLs?

Small retailers use 3PLs to expand revenues through home delivery and e-commerce, but large enterprises also use 3PLs. 

A study conducted by supply chain consultants Armstrong and Associates, found that 90% of Fortune 500 companies with operations in the United States have used 3PLs. Larger organizations use 3PLs for flexibility to expand their delivery capacity without increasing fleet size and to control logistics costs.

Challenges in Providing Great Delivery Service

One of the tradeoffs that businesses worry about when they partner with 3PLs is losing control of the delivery experience they provide to customers. Your average customer doesn’t have a strong conception of who’s carrying out a given delivery; whoever shows up at the customer’s doorstep is effectively the face of the retailer’s brand.

If the delivery experience is sub-par, or if something goes wrong, it’s the retailer’s fault—at least in the mind of the customer. To make sure this doesn’t happen, both parties need to work together to get the customer delivery experience right. 

For shippers, this could mean handling all of the customer communications internally even when a 3PL is doing the actual delivery. Or, the 3PL can send out communications based on a defined brand standard and SLA. Either way, each party needs the right tools, technologies, and best practices to consistently delight customers. 

Integrating 3PLs

Engaging a 3PL to carry out deliveries is only the first step. For small organizations adding an outside vendor can be difficult—who will tell them what to pick up, where it goes and when it needs to be there? For enterprises, the 3PL has to be integrated into an existing process that may not have been designed to accommodate outside vendors. 

For both, 3PL fulfillment software is the "middleware," the piece of the puzzle that allows the outside vendor to accept input—orders, schedules, ETAs—from the client while sending results—tracking, proof of delivery and customer communications—back to the client. 

The best 3PLs have already implemented third party logistics software in their own organizations, and are able to seamlessly integrate with the client's internal systems. When evaluating 3PLs, organizations should carefully investigate the 3PL's software and ensure it can both receive and send back the full spectrum of delivery data in a format their system understands. Flexible, bi-directional APIs are a necessity. 

If you’re a 3PL provider, it’s never too late to ask whether you have the right technology to make life easier for your clients. 

What Are the Benefits of 3PL Fulfillment Software?

Ideally, both the 3PL vendor and the shipper should have complementary software. While it's possible for the shipper to manage a 3PL vendor using software from the shipper's side, both parties get the maximum benefit when they each have a platform that talks to the other. The benefits are enormous: 

• When a 3PL uses software that optimizes not just routes, but also fleet capacity and crew assignments, it lowers costs for the 3PL and the shipper
• Allowing customers to schedule their own delivery windows from a list of pre-optimized time slots reduces not-at-home failures and improves customer satisfaction
• 3PL fulfillment software that incorporates advanced AI can pinpoint ETAs with 98% accuracy by considering all of the factors — distance, traffic, driver history, service time and more — that affect route timing
• Efficient routing reduces miles driven which speeds up deliveries and cuts fuel burn, reducing costs and carbon emissions
• Granular visibility into each delivery and each route allows both shipper and 3PL to monitor deliveries in real time and take corrective action immediately if something is getting off track
• 2-way live communications between all parties — customer, shipper, dispatcher and driver — reduce failed deliveries and increase customer satisfaction
• Automated customer satisfaction surveys provide instant feedback to surface delivery issues and highlight areas for potential improvements

All of that adds up to increased customer satisfaction, on-time deliveries and lower costs.

The Importance of Visibility for 3PLs

If you’re a 3PL, one of the best ways to provide piece of mind to your clients is to prioritize delivery visibility. When retailers can instantly gain insights into deliveries being carried out by third parties, they can feel confident that their standards for delivery service are being met, and they can take immediate action when they spot delivery issues. 

Unfortunately, third party deliveries are something of a black box by default. The only way for shippers to know what’s happening with their deliveries is for someone in the process to make a concerted effort to ensure that that’s what’s happening.

Luckily, like we saw above, technology has improved to a point where making that happen is easier than ever. Modern shippers can leverage fleet dashboards that centralize all of their deliveries—regardless of whether they’re being carried out by owned fleets or third parties. The trick is to prioritize software and data integration across the board. 

This is where those flexible APIs can come in. Finding the right software partner makes the entire process a lot easier. 

What’s the Best 3PL Software?

3PL fulfillment software is also critical to success for shippers and 3PLs alike. While there are many logistics software systems available, not all are created equal.

In particular, software that is legacy, on-premise software starts off with a disadvantage; you probably pay "per seat," meaning each new driver you boot up costs more money. 

Those older systems are prone to failures, often hard to integrate and require an IT staff to maintain and update. SaaS systems can avoid all of those issues. You may not always have the same 3PL partner going forward, so platforms with flexible, extensible APIs that talk to a wide variety of industry standard software is critical. 

And of course, you want something that will give extreme visibility across both your organization and that of your 3PL while also enabling the seamless management of last mile activities. 

At DispatchTrack, we’ve spent years helping both retailers and 3PLs to optimize routes, track deliveries, delight customers, and gain total data visibility into the entire last mile. Our SaaS platform is built to maximize connectivity and visibility across the board, so that both parties can easily get the data they need, when they need it. 

<< "We’re one of the three major final mile providers that cover the entire United States, and in the critical areas of route optimization and delivery execution, DispatchTrack is our application of choice." — Seth de Vlugt, Director of Customer Logistics at Ryder”  Read their story here. >>

If you’d like to learn more about how we help improve 3PL performance with smarter 3PL fulfillment software, get in touch today.