The Owner’s Guide to Picking the Right 3PL Software

March 6, 2023
10 min read

Everything you need to know when selecting the right 3PL software for your warehouse.


The rapid growth of technology has impacted every part of businesses today, including how third-party logistics (3PL) warehouses operate and offer services. According to a Technavio report, the 3PL software market is forecasted to grow by $579.54 million with a CAGR of 9.48% during the projected period 2021 to 2026. In fact, the growth momentum will progress, and North America will account for 42% of the market’s growth during the forecast period. 

To highlight how 3PLs have been benefiting from technology, 87% of warehouses that took part in the GMI 2020 survey stated that they use 3PL software like warehouse management software to streamline all their operations. The ability to gather data electronically, automate warehouses, and digitize the entire supply chain has enabled businesses to adopt a personalized, adaptable, and customer-focus approach to software in the market. 

This is why leveraging 3PL software can help 3PLs manage their operations efficiently, boost productivity, and reduce error rates.

With a multitude of 3PL software available in the market, selecting one that suits your business can be overwhelming. Keep reading as we explain the different types of 3PL software and key features to keep in mind when selecting the right one for your company.


What Is 3PL Software?

At its core, 3PL software plays a crucial role in streamlining the process of order fulfillment, warehousing, and transportation for 3PL companies. It comes equipped with a wide range of features that offer automation to many tedious aspects of order fulfillment, optimize smart warehouse workflow, and provide visibility to inventory and delivery status for efficient warehouse management.

Additionally, third-party logistics software can help track orders from beginning to end, giving your customers real-time data on the status of their deliveries. While the basics of 3PL software are to ease the fulfillment process, there are different types of 3PL software available to achieve that.


Types of 3PL Software

Generally, there are three major types of 3PL software in the market today. They are Warehouse Management Systems (WMS), Enterprise Resource Planning (ERP) Systems, and Supply Chain Management (SCM) Suites.

Warehouse Management Systems (WMS)

WMS is probably one of the most common software used by 3PL companies. Essentially, the system is designed to manage 3PL warehouse or storage operations, which include order picking and packing, material handling, inventory management, transportation management, and more.

Its primary goal is to increase the productivity and efficiency of warehouse operations by speeding up and automating processes. While many WMS solutions out there are customizable, they should include key features like inventory receiving, put-away, replenishment, tracking, order processing, picking, packing, and shipping.

Enterprise Resource Planning (ERP) Systems

ERP systems are more complex and comprehensive 3PL software, intending to provide 3PL providers a single platform to consolidate business’ key financial and operational functions. It offers features like inventory, order fulfillment, accounting, human resources (HR), and CRM.

With an ERP system, everyone in your company (like accounting or sales) has access to a shared database that gives them access to information they need to fulfill their own roles.

Supply Chain Management (SCM) Suites

SCM suites manage and supervise the entire supply chain process—product development and production, warehousing, inventory management, and shipping. In short, it gives you a bird’s-eye view of your entire supply chain and ensures that all moving parts work well together. SCM offers many of the capabilities of WMS software but with additional features that enable you to monitor and control other supply chain elements like freight transportation, supplier relationships, and pricing.

The suite improves visibility, mobility, and security while reducing operational costs and collaboration between different aspects of supply chain management.


5 Key Benefits of 3PL Software

As business owners, 3PL software can be your lifeline in this high-paced industry. Its capabilities can improve your warehouse operations and accuracy, giving your business a much-needed competitive edge. Let’s dive deep into some of the key benefits of having 3PL software.

#1    Automation

It’s no surprise that manual processes are one of the top warehouse problems. By automating warehouse processes, 3PL can streamline business operations and remove time-consuming and labor-intensive manual processes like invoicing and data entry. This results in efficient workflows and higher profitability.

#2    Reduce Errors

By manually handling the different stages of the order fulfillment process, you significantly increase the risks of human errors. With 3PL software, you can automatically analyze real-time data in a centralized location without human intervention, preventing costly errors and reducing unwanted delays.

#3    Flexibility

3PL software provides your business more flexibility, especially when it can customize functions based on clients’ needs. Given that clients’ demands and expectations continue to grow, such flexibility puts your business in a good spot as it helps you build a better client relationship for a long-term partnership.

#4    Business Intelligence and Scalability

It facilitates better planning and optimizes product flow across the supply chain, allowing your company to scale and meet the industry’s growing demand. With 3PL software, your business can also handle large volumes of data while improving accuracy and insights into your clients’ needs. For instance, the software can provide customized reports to see inventory levels or delivery status, which is critical in helping you make sound business decisions.

#5    Increase Visibility Into Operations

Another benefit of 3PL software is its ability to provide visibility into your operations, mainly due to its cloud-based system. You have access to insights into every aspect of the fulfillment process, providing you with an opportunity to make improvements and changes as required. By having real-time visibility, you can reduce errors and increase efficiency.

Additionally, 3PL software offers in-depth data and reports to help you make informed decisions on scaling your services, growing your client base, and adding more warehouses without needing additional headcount.


9 Key Features to Look for When Selecting 3PL Software

Here are nine key features to consider when selecting 3PL software to improve your warehouse operations.

  1. Integration
    To create more streamlined workflows and optimize warehouse operations, pick 3PL software that can integrate with your other key business ecosystems like your CRM, accounting system, and more. It should also integrate with your clients’ storefronts and marketplaces like Shopify, Amazon, Walmart, BigCommerce, Magento, and more.
  2. Easy Onboarding Process
    3PL software should never get in the way of attaining new customers. This is why it’s vital to pick one that offers an easy and comprehensive onboarding process for new customers. This reduces the chance of errors or miscommunication and gets your new clients onboard efficiently so you can deliver immediate value and generate income quickly.

    Additionally, 3PL software should make it easy for you to onboard new fulfillment clients like setup wizard, which can copy configurations from other existing clients and sync data from clients’ systems automatically. Lastly, the software should have an extensive knowledge base with technical know-how to help you navigate the software easily.
  3. Scalability Functionality
    3PLs often need to scale their operations fast, so ensure to go with 3PL software with robust scalability functions. One key feature is to find a system with smart automation features for different warehouse processes, as it can help business operations and business growth. Some critical areas that require intelligent automation include billing, picking logic, kitting and assembly, and order processing.
  4. Advanced Billing and Reports
    Coordinating billings and receivables is a key function of 3PL software. Choose a 3PL system that effortlessly automates put-away, storage, receiving, and shipping, so these services are billed accurately and on time. Additionally, you want your system to support unique billing items and multiple invoice formats.

    As for reports, select a system that has robust reporting capability to enable you to leverage significant 3PL insights to make informed business decisions. Having the right data and being able to mine intelligence from your data is what sets you apart from your competition.
  5. Client Portal
    A good 3PL system should do more than react to dissatisfied customers. It should proactively keep your clients in the loop by giving them information about their products. This is why getting a 3PL system with a client’s portal is crucial, as it can give your clients the flexibility to access real-time data and complete inventory visibility. It helps them know their products’ status as it moves across different touch points in the warehouse.
  6. Configuration
    An ideal third-party logistics software should cater to your business’ unique needs, allowing you the flexibility to tweak or add functionality and requirements as needed. For instance, when it comes to workflow optimization, your software should be able to apply different rules to reduce travel time with its logical walk sequence in the warehouse. Additionally, 3PL software should make it easy for your company to expand by adding inventory, opening new distribution centers, or entering a new market, allowing your business to scale quickly.
  7. Multi-Client Management
    Most 3PL businesses manage multiple clients. If you manage inventory and order fulfillment for multiple clients within the same warehouse, ensure you pick 3PL software that can handle a few clients within the same system. Additionally, features like client logins and dashboards, as well as the ability to view and generate their own stocks and dashboards, give your clients full transparency, which makes them happy and improves your client relationship.
  8. Specialized Attribute Tracking
    If your warehouse handles apparel or food and beverage, then your 3PL system will require specific inventory control functionality like direct picking based on the expiration date, also known as FEFO (First Expired, First Out). This picking rule helps prevent stock from losing its value due to spoilage or being outdated. If that’s not all, having lot control feature also offers granular tracking of inventory lots, perishable items with expiration dates, and seasonal products. This helps to organize your inventory and warehouse space well and ensure all goods are available and shipped out on time.
  9. Customer Support
    Another critical feature of 3PL software is to offer excellent customer support. As such, be sure to pick a provider that provides a great system and thrives on building a long-lasting partnership with you. Having a dedicated team that’s always reachable to address complex issues like setting up customized workflows or planning your warehouse layout can be a real lifesaver in the fast-paced 3PL environment. That said, opt for a provider that furnishes a variety of support options like on-site training, phone support, a ticket system, and more.

Ready to Pick the Right 3PL Software?

With an abundance of 3PL software out there, it’s crucial that you pick the best one to suit your business needs. To ensure you select the right one, equipped with all the necessary features and functionalities, we created a checklist for you to follow when making your decision

It’s time to unlock all these key features with VeraCore’s smart fulfillment software. The solution comes equipped with features designed to streamline your warehouse operations and help you work smarter, faster, and more efficiently.

With just one platform, the software offers various functionalities to improve your warehouse operations, scale your business, and take your operations to the next level!

Warehouse and Order Management for Third-party Fulfillment

See how we help third-party fulfillment warehouses eliminate inefficiencies in their operation with software that allows their business to thrive and keeps customers happy. Schedule a demo.