Whilst managing multiple customers’ goods effectively and profitably, 3PL Warehousing can be a challenge but a WMS solution can easily manage these difficulties.

As with any warehouse operation, the fundamental functions of a third-party logistics (3PL) operation are the receipt, storage, and shipment of goods. In 3PL warehousing, this can be more challenging as conventional warehouses normally handle the flow of goods for a single client, while 3PLs can be responsible for the inventory of multiple clients. To further complicate the process, each client will throw into the mix their own set of handling preferences, receipt and delivery schedules, storage mandates, reporting and accountability needs, and so on, making 3PL Warehousing a challenge.

What are the fundamental requirements of 3PL Warehousing?

Inventory Allocation

If you make a mistake in the receiving area, it can have a 10-fold effect on the rest of the warehouse process.

At its simplest, inventory allocation is the process by which an operator is instructed what to pick, in what quantity, and where to find it. In 3PL warehousing, inventory allocation must observe rules that accommodate a matrix of variables since, along with shared requirements, each customer normally brings a set of their own. The rules can include inventory age, lot requirements, rotation schedules, packaging configurations, and much more.

A WMS can automate this process by performing the allocation upon release of an order and providing instructions via an automated picking process. Virtually any parameter can be incorporated into the rules, and automating the process results in dramatically lower labour costs, decreased incidence of errors/mis-shipments and far faster order execution.

Good In and Out

Inventory accuracy begins with the receipt of goods at the dock, upon arrival the product is verified against original orders. Contents are checked for condition; discrepancies in quantity and special markings are noted; and the goods are released for storage, usually on a system assigned- pace basis. At the other end of the process, outgoing orders are checked for accuracy and completeness, labelled and packaged as necessary, and assigned shipping and delivery selections. A WMS provides outstanding organisational capabilities for expediting and monitoring the flow of goods into and out of the warehouse from the arrival of the truck to staging and allocation of locations to putaway, final processing and inbound load confirmation.

Cycle Counts

One of the key commitments of 3PL operators is the pledge to carefully safeguard the inventory of their customers and that means keeping accurate records of the stock on hand. Historically, this is done through periodic physical inventory counts. Under cycle counting, periodic partial inventory checks are conducted on certain customers, their product categories or other parameters. Under well automated systems, cycle counts can automatically maintain stock as it is removed or added, and the periodic inventories are often rendered unnecessary. Constantly updated inventory counts assure accuracy and currency for both the 3PL operator and its customer. Meanwhile, the 3PL operator eliminates the need to interrupt normal activities and at the same time, saves significantly in terms of personnel otherwise engaged in the physical counts.

Space Optimisation

In warehousing, space is money. Wasted or inefficiently used cubes equate to lost profit. 3PL operators need systems for planning the layout of their facilities as well as for constructing the shelving and racking, aisle dimensions, and other physical characteristics in order to optimise the put-away, storage, retrieval and staging of their customers’ products. WMS solutions provides the detailed information operators need – customer by customer – in order to optimally manage both the customer concerns and the profitability factors in the overall warehouse operation.


Allowing the WMS system to drive a best practice warehouse process during receiving & putaway will result in big time and money saving benefits for most operations

Where and how inventory is stored impacts every successive activity in the supply chain. The put-away process controls the movement of goods from the receiving dock or from an interim functional, production or relocation area to its storage location.

System directed put-away, driven by the 3PL software, selects the location in accordance with inventory storage rules that are tailored to the requirements of each customer. Numerous benefits accrue from this automated, highly intelligent process. Among them are more effective space utilisation, more efficient picking processes enabled by associated picking rules, elimination of picking searches, better bin utilisation and more. Put-away rules in 3PL software provide the flexibility to assure that customer preferences and warehouse operating requirements remain fully compatible.

Shipping & Scheduling

Scheduling enables 3PL operators to coordinate with carriers in order to establish efficient movement of loads in and out of the warehouse. Moreover, by automating the shipping process, it becomes easier for the warehouse to schedule the resources it needs to move product and to load and unload shipments at the inbound or outbound docks. Appointment schedulers can consider a variety of load parameters in assigning the necessary times and resources to loads of various types, among them delivery timetable, order content, dock capacity, warehouse capacity, labour requirements, and handling capabilities.

Reporting & Analysis

Many 3PL operators are making strides toward the elimination of paper processes and records to achieve greater efficiency and lower costs. Major initiatives include establishment of electronic document environments, which substitute electronic form templates for pre-printed and laser printed paper forms. Whether they are printed or remain in electronic format, these forms provide extraordinary flexibility and speed of preparation and delivery. Reporting, whether formally scheduled or ad hoc, is enabled for warehouse operators, and often for their customers as well, through incorporation of data mining and reporting tools into the software.

In Summary

As more and more manufacturers, distributors, and wholesalers opt to assign non-core activities to outside specialists, 3PL operators have assumed a critical role in supporting manufacturing and distribution operations. Accordingly, the software system they select to execute these vital functions in a precise, secure, and timely manner is critical not only to their customers’ interests but also to their own viability and success.

About us:

Speak to one of our team to understand how Clarus’ WMS system can cost effectively support best practice warehouse management processes, better customer service and highly efficient working for a range of warehouse operations with pay per month options and no IT infrastructure needed.

Our platform can scale from a one user, small depot system to a 100’s of user distribution centre operation. The ClarusWMS platform will cost effectively scale with your business based on demand.

ClarusWMS is a UK based supplier of warehouse management solutions with a wealth of industry experience in third party logistics, wholesale / retail distribution, online fulfillment and manufacturing warehousing.