As your business grows and stock levels become too cumbersome to manage in-house, outsourcing makes more and more sense. But exactly how does 3PL inventory management help?

As a small to medium-sized business, you’re most likely already familiar with the in and outs of managing inventory as they pertain to you directly. That is, working with rising and falling stock levels, purchase orders, sales orders, billing, invoicing etc.

But what happens when your ability to effectively manage the intricacies of these daily operations becomes compromised due to growth factors? You may not have the same resources to run a dedicated division as larger companies do.

The Importance of 3PL Inventory Management

This is where 3PL Inventory Management fills the need as a financially efficient option that manages inventory for you. By relieving the strain of trying to fully control all aspects of inventory management of a growing company, resources are freed up which lets you concentrate more on the business of building the business.

With the help of outsourced 3PL management, your company maintains balance by identifying what products need to be ordered and when without over-investing in stock.

3PL Inventory Management Services and Benefits

As mentioned, the size and demands of your business will dictate if you need 3PL inventory management. If you have inventory sitting in a warehouse unsold because of operational issues, you have cash resources tied up that could be used to outsource and resolve the same problem, and move you forward at the same time.

A few of the more common situations for retaining 3PL services include:

• You want to expand your company into multiple regions
• The time and cost of in-house inventory management are excessive
• You want to control overhead as you scale up your business
• You want to leverage additional data for insights that make better decisions
• You want to propel growth instead of concentrating on operations

The benefits of 3PL inventory management can be substantive and transformative for a business. By partnering with a 3PL provider who has the resources beyond your current capabilities, you gain an edge over smaller competitors and extend your business’ functionality.

Operational Scalability

Contractually speaking, most 3PL inventory management agreements are based on a pay-as-you-go business model. This makes it easier for your company to scale operations without having to invest large capital sums and suffer additional carrying charges.

These freed up resources also allow you to effectively react to seasonal demand fluctuations and get accurate billing for all transactions.

Expanded Materials Handling and Labour Capabilities

Playing a key role in being able to help you manage inventory, value added services such as packaging, labelling, co-packing and cross-docking are major benefits offered by many 3PLs. By outsourcing specific labour requirements to an experienced third party, your own labour force in effect multiples without the added burden of having to manage the employees yourself.

Real-Time Access to Stock Levels

Many third-party logistics partners offer a managed portal for monitoring the flow of their goods and stock levels in real time. With access to live data and twenty-four-seven transparency, it’s much easier to monitor stock levels and take action when they become excessive or run low.

Furthermore, inventory management software and WMS feedback can supply additional services such as generating client reports and deliver shipping notifications.

A Bigger, Better Distribution Network

Gaining a foothold in other regions or countries requires an established logistics network. This is where your 3PL partner shines through with brokerage connections and carrier relationships.

Your 3PL partner will also have access to the extra warehouse space you need, often of various types such as climate controlled, refrigerated, or even specialty storage depending on your needs.

What is a 3PL Inventory System?

A 3PL inventory system is a cost effective method of outsourcing internal competencies such as transportation, warehousing, packaging and many other services. Combined with a managed warehousing services, offloading inventory management to a third party is an effective solution when you need to make room for expansion.

3PL Inventory Management Software

To help track and trace the flow of inventory, a Warehouse Management System, or WMS software system is employed to track and manage nearly all warehouse activities.

Top 3PL Inventory Management Companies

3PL companies come in various sizes from local or specialized to regional or internationally recognized operations. Some of these major players are tightly focused on certain market sectors and include such names as:

• ShipBob
• FedEx
• DHL Supply Chain
• C.H. Robinson
• Ryder

FAQs

How do I find a good 3PL company for inventory management?

Talk to 3PL clients to get first-hand feedback. Compare a few different 3PL services and choose the better ones then determine whether a specific company suits these shipping and inventory management needs.

How much does 3PL inventory management cost?

The cost 3PL inventory management will be directly related to the specific needs of your company. Some 3PL companies offer a per-hour rate which may cost roughly $30-$70 an hour USD. Others may charge a flat rate anywhere between $70-$300 USD depending on your specific inventory management requirements.

How much 3PL space do I need?

A good 3PL will help you determine the appropriate amount of space you require now, and help plan for further space as you need it. Usually an estimate based on these metrics will be provided to you by the 3PL inventory management service then negotiated for agreement.

How to Find the Best 3PL to Help Manage Your Inventory

A better 3PL partner that is nimble enough to develop custom solutions tailored to your business. They will also have the space, staffing and equipment in place and aligned with your chosen market. Other key factors to take into account include compatibility with your organization’s technology stack, details on warehousing capabilities and locations, automation features, value-added services, pricing and vision for the future.

Of course, one of the best ways to find an ideal 3PL partner is to get first hand feedback from existing clients. As you know, qualified referrals go a long way to making better decisions.

Furthermore, look for a 3PL partner that is growing aggressively. Regardless the scarcity of prime real estate, some 3PL providers are being proactive by actively growing their operational footprint. Brimich Logistics and Packaging for instance, has recently acquired regional warehousing out of Etobicoke Ontario in order to support the growing inventory and distribution needs of its customers.

What role does freight logistics play in making sure your products are delivered on time, and on budget?

What Is Freight Logistics?

Freight logistics comprise the core systems and infrastructure of an estimated $270 billion global business.

At any given point, the knowledge of shippers and carriers, the technology, experience, and human resources make possible the smooth and efficient movement of goods around the world.

One major example, international maritime shipping, accounts for about 90 percent of world trade, and without these logistical mechanisms, simply would not be possible.

The following is a useful look into the key components of freight logistics including: communication, tracking and tracing, warehousing and distribution, customs, and insurance.

The Seven Rs of Logistics

To understand the complexities of strategically coordinating the elements and functions necessary to the efficient operation of the international maritime shipping industry, it’s helpful to understand the basic principles represented by:

1. The Right Product

2. The Right Place

3. The Right Price

4. The Right Customer

5. The Right Condition

6. The Right Time

7. The Right Quantity

In practice, making sure the correct cargo reaches its intended destination safely and on time is priority one.

The logistical systems of freight management are equal parts mechanical and organic. In order for their respective supply chains to properly function, each  must pull its weight in perfect synchronicity.

To get a better idea of how massively intricate the global flow of freight is, the interactive map below illustrates just how much the world relies on coordinated logistics systems:

How Freight Forwarders Play Their Part

Managing the specific needs of such a highly coordinated system requires a freight logistics team dedicated to:

• Negotiating freight rate contracts
  
• Ensuring continued customs compliance and insurance protection
• Maintaining relationships with steamship lines
• Minimizing empty miles by coordinating efficient shipping routes

Freight forwarders oversee the following logistical responsibilities:

1. Communication

2. Tracing and Tracking

3. Warehousing and Distribution

4. Customs

5. Insurance

Logistics Communications

Logistics companies partner with businesses to make the right decisions impacting finance, production, engineering, marketing, transport, warehousing, purchasing, and inventory management.

What does this do for your business’s bottom line?

By minimizing the amount of connections needed to link a variety of economic players, third party logistics providers help reduce costs.

Tracking and Tracing

Freight Forwarders typically utilize specialized software called a Transportation Management System, or TMS, to trace and track shipments, making any freight’s journey transparent. This helps logistics management to:

• Develop more efficient procedures
• Improve customer service
• Save money

An integrated TMS reports crucial data about carrier performance, transportation costs, and market trends.

Though the goal is always in smooth logistical operations, the TMS detects hiccups that may defer delivery, facilitating prompt notification for any customers who may be affected by the delay.

This enables freight forwarders to continually refine their strategies in creating a cost-effective supply chain.

Warehousing and Distribution

Diligence in warehousing and distribution pays dividends for your supply chain. There are many opportunities that can cause costly mistakes, there are just as many to excel.

Freight is the life’s blood of both buyers and sellers, therefor faithfully adhering to regulated warehousing and distribution procedures help logistics partners earn trust and strengthen relationships.

A breakdown of value-added warehousing and distribution services include:

• Cargo Packing and Crating
• Pick and Pack
• Labeling+ Barcode schema:
  + Label materials
  + Label placement
  + Complementary technologies
• Vendor Assembly and Consolidation
• Kitting
• Visual Inspection Services:
  1. Inspect the carrier for cleanliness, dryness, ventilation, and cargo separation to be sure the vessel is appropriate for its designated cargo.
  2. Report on markings, type of packing (bulk, cartons/drums, etc.) and a count of goods.
  3. Confirm that a valid mate receipt (document signed by an officer of a vessel evidencing receipt of a shipment on board the vessel) was received.
  4. Verify that units match those listed on the order description.
  5. Check packages and labels for correct dates and batch numbers as well as supplier certificates.
  6. Document when and where product was loaded, and the processes used to do it.
  7. Maintain a time log that includes dates and times of arrival, departure, loading, and delays (citing the reasons for the delays). Descriptions of loading gear and weather conditions should also be listed.

Managing Customs

In simple terms, customs brokers produce documentation for shippers to prove that the required customs procedures have been performed and the goods have cleared for shipment when entering or leaving a country.

If warehousing procedures aren’t complied with properly, the warehoused freight waiting for clearance might instigate extra fees. This can add up to hundreds or thousands in avoidable shipping costs.

Whether importing or exporting, the documentation is extensive, plus laws vary from country to country and port to port.

Time, money, and relationships can be compromised without the proper attention from a licensed customs broker as logistical errors can easily be made.

Required documents for importing or exporting cargo are:

• Purchase order from buyer – The terms include:
  • Price
  • Quantity
  • Quality
  • Description
  • Latest ship date
  • Mode of transportation

• Sales Invoice – An example sales invoice may include:
  • Clear description of the item
  • Quantity
  • Value, in foreign currency and U.S. dollars
  • Country of Origin
  • Where it was purchased
  • Names and locations of buyer and seller
  • Address of the person or business the goods are being shipped to

• Packing list – A packing list may also:
  • Accompany an insurance certificate
  • Be used to issue a Bill of Lading
  • Contribute to electronic export information (EEI)
  • Help customs officials verify goods

• Shipping bill
• Bill of lading
• Bill of entry
• Certificate of Origin

Other requirements may include other documentation specific to the buyer, or financial institution, or Letter of Credit terms per importing country regulations.

When negotiating for an appropriate freight forwarder, it’s imperative to exercise due diligence and research whether a given forwarder has experience and is knowledgeable enough to handle your particular customs brokerage needs.

If not, consider splitting the tasks between a separate customs broker and forwarder. Though the costs may rise, the price of inadequate or negligent customs brokerage is not worth the risk.

Insurance

Due to the inherent nature of unforeseen problems arising despite best hopes, whether accidental or instigated, the need for insurance is a must in freight logistics.

Industry experts cite that, cargo theft is a $30 billion a year business. While this is indeed a serious potential threat to your freight, it’s far from the only bad thing that could happen to your cargo.

Also adding to the potential for loss or damage are:

• General Handling
• Bad weather
• Long extended voyages
• Continuous moving and shifting of cargo

Therefor protecting your cargo from its point of departure to final delivery warrants insurance coverage.

Because of the broad scope of goods that require transportation, it’s imperative you work with a partner that can set you up with a plan that best suits your cargo’s, and your business’s needs.

What Is The Most Important Part of Freight Logistics?

As you can see, freight logistics is a multi-faceted and intricate balance of elements all designed to help move your business forward. But the most important thing to remember is that it always involves engaging the right people with the right expertise at each step along the way.