What is WMS and 3PL?

From warehousing, inventory management, and order fulfillment centers, third-party logistics processes is at the heart of the supply chain. For companies that rely on these logistics businesses, the receiving, storing, and shipping of inventory are crucial components to their growth—especially when supply chain management can be complicated.

With the specialization of logistics functions becoming a necessity for many organizations, especially with the rise of ecommerce and omnichannel fulfilled network, the outsourcing of these specific responsibilities has fallen to third-party warehouse businesses called 3PLs, or third-party logistics warehouses.

But what exactly is a 3PL? What do they do? And what are the reasons for hiring one?

A third-party logistics warehouse, or 3PL for short, is an outsourced business that takes care of a company’s supply chain and logistics operations. Simply put, 3PLs are used for the outsourcing of third-party warehouse and distribution needs for their customer’s inventory and fulfillment services.

3PL warehouses manage 3PL stock, hold, and ship the inventory of multiple businesses or other businesses in addition to their own inventory. If they fulfill and store orders for both their own business as well as their clients, they are what’s known as a hybrid 3PL.

Many 3PLs have fulfillment specialties or sub-types denoting a specific vertical or industry. These include, but are not limited to:

B2B
Ecommerce
Retail
Apparel
Raw Materials
Bulk Goods
Nutraceuticals
Wines & Spirits

What is NOT a 3PL?

Private warehouses, or warehouses that only fulfill orders of their own products, are not considered 3PLs. These types of warehouses are usually owned and managed by manufacturers or retail stores. They use specific accounting, billing, and shipping software that often does not allow for the flexibility needed to manage inventory and billing for multiple customers. If a private warehouse is looking to monetize additional warehouse space, they will likely need to invest in a warehouse management system (WMS) designed for 3PLs.

What Are the Responsibilities of a 3PL?

Third-party logistics warehouses take on important supply chain operations to help their customers focus on growing their own
businesses. This means everything along the supply chain and includes logistics operations like:

Scheduling and executing the receiving of inventory to the warehouse
Sorting, managing, and accounting for all inventory
Maintaining inventory in proper conditions
Negotiating discounted shipping rates
Picking, packing, and shipping products Kiting and assembling products if necessary.

What is a Warehouse Management System ( WMS )?

A Warehouse Management System, or WMS, is software that manages all day-to-day operations within a warehouse and acts as the foundation for any other technology systems a warehouse might implement. The scope of WMS functionality is extremely comprehensive, ranging from receipts and location management to picking, packing, and shipping of orders and everything in between, including inventory management.

Most WMS software includes options for customer management for public warehouses, also known as third-party logistics (3PL) warehouses, that include the option for customer portals and notifications so that customers can monitor their own inventory control. One of the highlights of WMS platforms is the extensive data analytics and reporting options that provide insights into inventory tracking for both warehouse and customer users.

On-Premise vs. Cloud-Based Warehouse Management System
On-premise warehouse management system refers to software that is hosted and maintained on-site using the warehouse’s own servers. The warehouse’s IT department and resources are responsible for managing both the software and hardware required to run their business. On-premise solutions used to be the industry standard for their customizability to accommodate a warehouse’s specific workflows. However, they lack scalability and force users into the “buy, upgrade, maintain” software cycle with software updates that come at a cost. In addition, when using on-premise WMS solutions, IT departments must download and manage updates, making implementation complicated, bugs and errors hard to manage, and inefficient to maintain.

Alternatively, cloud-based warehouse management system software, like EASY3PL, is hosted online in the cloud, often with no downloads needed. Instead, the warehouse accesses the software online, so users can securely login to the system on any connected device, not just at on-premise terminals that have the software installed. Additionally, cloud-based WMS software providers publish updates automatically, drastically decreasing downtime spent implementing upgrades, and build the software to standard specifications for broad warehousing needs to help align warehouse workflows to best practices.

WMS Integrations
For those fulfilling ecommerce operations, especially with an omnichannel fulfillment strategy in which the warehouse handles transactions across a wide range of sales channels with a unified approach, the WMS software is great for integrations with shopping cart platforms, marketplaces, and application programming interface (API). Such systems can also communicate with other customers, vendors, and suppliers through technologies like Electronic Data Interchange (EDI), UCC-128 label printing, and receiving against advanced shipping notice (ASN).

Top warehouse management systems are also able to integrate with a wide range of internal and external software systems including Enterprise Resource Planning (ERP) Systems, Supply Chain Management Systems, Order Management Systems (OMS), Transportation Management Systems, Barcode Scanning Systems, accounting programs, and ecommerce platforms.

Automated Warehouse Processes
The key objective of a WMS is digital automation. Digital automation refers to eliminating manual processes with software and/or hardware to reduce human error, inconsistencies, and slow speeds of handling repetitive tasks. With digital automation, a WMS creates automatic best practice workflows and processes that are repeatable across customers, which is particularly valuable to third-party logistics warehouses who serve multiple customers.

For example, a WMS automates billing by capturing all billable activities in the warehouse including recurring storage, shipping, and handling fees as well as other charges. At the end of the billing period, the WMS gathers all charges into invoices that the user can then export to integrated accounting software like Quickbooks.

Other processes that a WMS can automate are inventory management with directed putaway and cycle counting, auditing, and tracking of goods within the warehouse; receiving against ASN; shipping and order management; and picking and packing with mobile barcode scanning.

Picking and packing with integrated mobile barcode scanning technology is a major selling point of WMS software. With mobile barcode scanning, the user can scan each item’s barcode at pick and pack real time information to ensure they have the correct item and quantity. This is especially useful in workflows with serial numbers, which previously incurred a lot of human error when the user would have to manually check long serial numbers of incoming and outgoing items. Additionally, mobile barcode scanning is useful in inventory management during cycle counting and monitoring not just the quantity of a particular item but also the quality of items (i.e., if they are damaged or expired).

Warehouse Management System vs. Order Management System
What’s the difference between WMS and OMS? Warehouse Management System and Order Management System are similar software solutions used by warehouses, but the two have different functionalities. Whereas a WMS offers a comprehensive package that captures, records, and analyzes data on all day-to-day functions performed by a warehouse of goods, an OMS only monitors the coming and going of all inventory throughout the supply chain for its entire lifecycle, including in the warehouse, and orders related to it.

Because of this, OMS is not a replacement for a WMS, which does much more than track inventory and orders, but an OMS can complement a WMS in a warehouse technology stack. OMS is also a good solution for private warehouses that do not have multi-client operations or for customers of third-party logistics warehouses that want to track their own inventory.

Who Uses Warehouse Management Systems?
Both private and 3PL warehouses use Warehouse Management Systems to digitize and automate their warehouse operations. A WMS is useful for all order fulfillment types including pallet in/pallet out, B2B, B2C, ecommerce business, and omnichannel, as the software allows warehouse users to manage inventory and transactions from a variety of receiving and sales channels. Furthermore, WMS systems can handle the needs of warehouses serving multiple industries and verticals including but not limited to retail, apparel, bulk goods, raw materials, cold storage, nutraceuticals & pharmaceuticals, wine & spirits, and hazardous materials.

Private warehouses will sometimes opt for an inventory management system (IMS) instead of a WMS because they only want to track inventory, but this software is extremely limited compared to WMS software and would not suit more complicated operations. Because of the versatility, adaptability, and customizability of WMS software, any warehousing operation – whether public or private – can benefit from using a WMS to record data on all the happenings within their warehouse. Both comprehensive and robust, WMS software is the best solution for warehouses to manage order volume demands and keep track of all transactions performed by the warehouse.

Why Use Easy3PL WMS Software?
Easy3PL’s cloud-based warehouse management systems built to meet the unique needs of the 3PL warehousing community. Serving as the backbone of our customers’ operations, our platform, Easy3PL, quickly transforms paper-based, error-prone businesses into service leaders who can focus on customer satisfaction, operate more efficiently, and grow faster. Offering a comprehensive warehouse management platform, we make it easy for 3PLs to manage inventory, automate routine tasks, and deliver complete visibility to their customers.

Because Easy3PL’s Warehouse Manager is a cloud-based Software-as-a-Service (SaaS), our software breaks the costly and high-maintenance software cycle, freeing up our customers’ time with automatic updates and easy implementation. Additionally, our WMS software acts as an all-in-one solution with extensive capabilities unmatched by IMS or OMS software offerings or other WMS products. We offer integrations to other ecommerce and omnichannel programsas well as mobile barcode scanning and many other types of wms software your warehouse may be using already.

Our customer service offerings set our 3PL Warehouse Manager software apart with implementation managers that make sure you get your 3PL warehouse up and running on our system in as little time as possible, dedicated customer success managers that build an individual relationship with your warehouse, and a customer support team available 24/7. As a premier WMS provider built specifically for 3PL warehouses, we continually expand and upgrade our platform to meet warehousing needs for omnichannel fulfillment and provide enterprise-class WMS functionality to the ever-evolving 3PL warehousing industry.