How to Improve Inventory Tracking?Simple Guidance for You in Inventory Management

With the rapid development of third-party logistics, 3PL‘s advanced inventory management system can save you time and money.

However, for companies with relatively small business volume, in-house management is still required. Choosing the right inventory tracking method can help improve inventory accuracy.

What Are the Types of Inventory?

Before you can improve warehouse management, you need to understand the inventory types accurately. The following are the different types of inventory:

How-to-Improve-Inventory-Tracking?丨Lynda.com丨ChinaDivision
How-to-Improve-Inventory-Tracking?丨Lynda.com丨ChinaDivision
  1. Raw Materials, materials used to manufacture products
  2. Work-in-Progress, unfinished product being produced
  3. Finished Goods, finished goods stored in the warehouse, waiting to be sold or shipped
  4. Overhaul/MRO, maintenance, repair, and operation supplies, items used to support and maintain the production process and its infrastructure. These items are usually consumed due to the production process’s needs but are not directly part of the finished product. MRO inventory includes lubricants, cleaning supplies, gloves, packaging materials, and other supplies. It also consists of some office supplies, such as staples, pencils, copy paper, etc.
  5. Transit Inventory, the items have been loaded and are in transit.
  6. Anticipation Inventory, to meet the expected surge in sales inventory
  7. Decoupling Inventory, supplies, or products reserved in anticipation of stagnation in some production links
  8. Cycle Inventory, products shipped from a manufacturer or supplier to a company, and then sold to customers immediately
  9. Theoretical Inventory, the inventory rate in and outreaches a balanced ideal state, and inventory products can pass through the manufacturing system’s minimum stock without waiting. But in reality, the warehouse will always have some inventory (such as MRO inventory, decoupling inventory, etc.)

What inventory tracking method is the optimal solution?

Manual tracking

You must complete the inventory count for the outbound and inbound warehouse inventory in the manual tracking system. Besides, any updates to inventory records require manual operations. You can manually copy the item number and any other relevant details, but this inventory tracking method can be time-consuming and has a higher error rate. But one advantage is that you don’t have to pay for barcode scanners and other expensive equipment.

Barcode and QR code tracking

Bar codes or QR codes are commonly used in inventory tracking. The inventory system automatically extracts detailed information by scanning the product barcode or QR. The administrator can quickly and easily change the information in the system. This inventory tracking method can achieve efficient inventory management, so 3PL service providers usually recommend this method.

RFID tracking

As with barcode and QR code tracking, you can use RFID tracking to scan products and automatically extract their detailed information. The main difference between RFID and other scannable codes is the technology behind them. RFID tags scan more comprehensively, so they are very useful for inventory systems that move many products. However, only a few inventory management software supports RFID tracking because it requires specialized (expensive) tags and scanning equipment.

Why Do You Need a 3PL Warehouse Management System?

What is 3PL Warehouse Management System?

3PL Warehouse Management Software System (WMS) manages and records almost all physical cargo warehouse operations, including inventory management, shipping, receiving, putaway, picking, packaging, etc.

This software system helps simplify many time-consuming processes for one or more warehouses. Suppose your order volume exceeds the processing capacity of the internal warehouse. In that case, you can outsource these tedious tasks to a third-party logistics company, and they will design a set of suitable warehousing logistics solutions for you.

Advantages-of-3PL-Warehouse-Management-SystemMecalux丨ChinaDivision
Advantages-of-3PL-Warehouse-Management-SystemMecalux丨ChinaDivision

Benefits of Using 3PL Warehouse Management System

Inventory Control: 3PL WMS can collect the receiving, movement of the entire fulfillment center inventory through a barcode scanner. All SKU inbound and outbound data can be tracked and confirm inventory products’ location in real-time, improving inventory accuracy.

Realtime Inventory Tracking: Professional 3PL will provide partner companies with inventory management visibility data. Shippers can easily know the progress by accessing reports and tracking real-time inventory remotely online.

Nowadays, many warehouse management solutions can be seamlessly integrated with enterprise resource planning or corporate accounting rights and health solutions, allowing customers to adjust their current and future development needs.

Due to these functions’ convenience, the original time-consuming tasks such as manually generating management reports are eliminated.

Advanced 3PL Billing System: Billing is a very important part of the 3PL warehouse management system. When a 3PL provider provides this service to multiple customers, this process requires a comprehensive 3PL system to support. An accurate billing system will significantly reduce billing time while improving other functions.

Order fulfillment automation: 3PL providers are order fulfillment experts. They have adopted many advanced systems and equipment to support order fulfillment to save customers time and operating costs. Integrated WMS aims to simplify the order fulfillment process and make these tedious tasks simple and easy.

In Conclusion

With the explosive growth of 3PL warehouse and inventory management software, the emerging 3PL management software is expected to bring higher efficiency, thoughtful design, and advanced services to provide customers with the best solutions.

Third-party logistics companies will provide many benefits for your supply chain, and you can save time and resources while maintaining efficiency and customer satisfaction. If you haven’t considered adopting a 3PL warehouse management system solution, now is the time!

How to choose a fulfillment company?

What is a fulfillment company?

Fulfillment company usually refer to the organization that provides companies with services such as order receipts, packaging, and transportation. The functions and scope of order fulfillment are now more complex and efficient than ever before.

A technologically advanced fulfillment center can manage and simplify the fulfillment process through order fulfillment software or systems.

Outsourcing the management of the order fulfillment process to a professional fulfillment company allows companies to focus more on order growth instead of internal warehouses, inventory management, transportation, and returns.

fulfillment-company丨3plcenter丨ChinaDivision
fulfillment-company丨3plcenter丨ChinaDivision

What kind of factors should you consider when you choose a fulfillment company?

1. Delivery speed

Now Amazon Prime has set a new two-day delivery rule, which means that consumers expect faster shipping speeds than ever before.

So, if your company’s current order volume is considerable but the order delivery speed is far behind, then your customer churn rate will gradually increase. When your company can no longer optimize the order fulfillment process, you can try to cooperate with an order fulfillment company.

Excellent and professional fulfillment companies have effective management systems and order fulfillment software, enabling them to deliver quickly.

2. The location of the distribution warehouse

The most important point of order processing outsourcing is to examine the location of the distribution warehouse of the partner company.

To meet customers’ expectations of delivering products in a short time and improve their user experience, it makes sense to choose an order fulfillment center close to the customer. For your international business, you need to confirm whether the other party provides global delivery services before cooperating with them.

To reduce the additional burden on your business and devote more time to increasing order volume, you need to study the order fulfillment system and software used by the fulfillment companies you cooperate with. Different fulfillment companies vary order fulfillment software, and you need to ensure that their software is easy to implement and can seamlessly integrate with the business platform applications you are using.

How-to-choose-a-fulfillment-company丨Atlantic-Marine-Services丨ChinaDivision
How-to-choose-a-fulfillment-company丨Atlantic-Marine-Services丨ChinaDivision

3. Transparency

The transparency of order fulfillment is also an essential part of your corporate image. Survey data shows that 88% of consumers want to track their products in real-time. 69% of consumers said that if the merchant fails to deliver the product within the promised delivery date, they will not shop again in the future.

Therefore, when you choose an order fulfillment partner, you need to know whether it can meet the delivery time limit you require.

4.Return management

Due to the fast and convenient free return and exchange policy, about one-third of online orders are canceled orders. Some returns are uncontrollable (the customer doesn’t like the product at all). A reputable fulfillment company will manage the product well and minimize returns.

5.Cost

Your cooperation with a third-party logistics provider involves some initial costs, but in the long run, you will save labor, logistics costs, storage costs, etc. Besides, you also need to make sure that the fulfillment center you cooperate with can provide you with the best deal.

Since you have to pay for delivery services (your products are always moving after all), the delivery center should not charge you for long-term storage.

Due to the shipping volume of the shipping center, the distribution center can also get a larger discount from the operator than any single e-commerce retailer, so you want to make sure they can pass on some of the savings to you. These reduced costs often allow e-commerce retailers to compete with industry giants by offering free or reduced-price transportation.

Simple Guidance For You In Order Fulfillment Cost

Different 3PL order fulfillment costs are different. When you decide to use 3PL services, you may encounter some expenses and knowledge you need to know before signing the agreement.

3PL-Order-Fulfillment-Costs丨Tenaxx-Logistics丨ChinaDivision
3PL-Order-Fulfillment-Costs丨Tenaxx-Logistics丨ChinaDivision

Startup costs

When you decide to start with 3PL, you may encounter startup costs. This fee is used to run e-commerce services and is a worthy investment project because it helps reduce confusion when using various services.

Inventory receiving costs

A 3PL will first receive your inventory, and then begin processing and fulfilling your online store orders. Inventory receipt means that the specific conditions of inbound and outbound logistics will be taken over by 3PL. Different 3PL own different charging methods, such as per-unit, per-pallet, flat rates, or per hour.

Inventory storage costs

When your goods need to use the 3PL order fulfillment center to store inventory, you will need to pay for storage space. Storage fees range from per SKU or per unit storage to a fixed fee (for each box, shelf, or pallet used).

Order pick and pack costs

Some 3PL models include Order pick and pack costs. After the customer places an order, the fulfillment process starts picking or use the picklist to collect each ordered item from its designated storage location. Many fulfillment providers offer to charge on a per-pick basis, which means you pay for each item included in the order.

Packaging costs

Your product packaging represents your brand image. Some 3PLs will charge for packaging materials as a separate order item, while other 3PLs include them in their fulfillment services.

Kitting costs

Some 3PLs provide kits and assembly services. Kitting refers to any unique way of assembling, arranging, or packaging items before shipping. Common applications for kitting include assembling multiple SKUs during packaging or preparing inventory in a specific way. Because this service is designed for each customer, the supporting fees may vary.

Shipping costs

The last section is e-commerce shipping costs: the amount charged by 3PL to transport orders from its fulfillment center to the customer’s doorstep. Many 3PLs will work with major transportation companies to enable them to provide volume discounts to customers. Transportation costs take into account many factors, including transportation efficiency, transportation area, and product size and weight.

Fulfillment Center vs Distribution Center: What’s the Difference?

Order fulfillment is the core part of e-commerce. Before choosing a fulfillment center and a distribution center as part of your e-commerce supply chain, you should be aware of the difference between the two.

As e-commerce becomes more prosperous, more and more consumers choose to purchase large items online, resulting in an increasing demand for warehouse space. According to data from the CBRE Group, the availability of industrial real estate in the United States is only 7%. Warehouse space in high-demand areas close to the city center is particularly narrow.

At the same time, CBRE data also shows that 1.25 million square feet of warehouse space are required for every $1 billion in e-commerce sales.

0807blog插图 3

Explanation of the fulfillment center

The fulfillment center is a warehouse for e-commerce fulfillment services. Your company’s products are shipped to the distribution center in the form of containers or pallets. The warehouse will store your products until they are sold. The fulfillment center is the final destination of your products before they shipped to consumers or wholesale customers.

When your sales platform receives an order, the product is directly transmitted from your sales channel to your fulfillment center. Most order fulfillment service providers will have an online dashboard, which can track the progress of the product in the entire warehouse.

The fulfillment center will remove the order items from the shelves and package them for delivery and transmission. The shipping station will label it and notify the carrier to prepare to pick up the package. Carriers such as FedEx, UPS, and USPS will regularly pick up the goods at the distribution center every day.

Many fulfillment centers also provide other services, including inventory management, multi-channel, and matching and customization.

There are other names for fulfillment centers, such as:

  • Fulfillment warehouse
  • Order fulfillment center
  • 3rd-party logistics warehouse(3PL)

Third-party logistics can refer to fulfillment centers or more complex logistics operations. In addition to 3PL, there are other levels of logistics services, such as 4PL, 5PL, and so on.

Explanation of distribution center

The distribution center is also a kind of warehouse, but its position in the supply chain is different. The distribution center redistributes the products in the warehouse, but the distribution center can also store products.

The direct docking object of the distribution center is not the consumer, but the transfer point that converts the product from one mode of transportation to another. Product advantages will be transmitted from the distribution center to the fulfillment center for order fulfillment. Besides, distribution centers can also serve as commodity centers for large retailers.

Fulfillment Center vs Distribution Center: What Kind of Business Do You Need?

If the center of your business is e-commerce fulfillment, your choice may be a fulfillment center rather than a distribution center. The next step in your decision is to find the most appropriate provider of fulfillment services for your business, which also involves the level of service your business needs, the size of your business, and the type of products you sell. Make sure that the service provided by the fulfillment company is what your company needs.

Fifth-Party Logistics (5PL): The Future of Logistics?

Due to the impact of COVID-19, the current global logistics has become more and more complex. However, the importance of logistics in the supply chain has not yet been explained.

Except for those who are extremely proficient in logistics, most people are still unclear on which level of logistics to choose. Company leaders choosing the right logistics service (1PL, 2PL, 3PL, 4PL, 5PL or even 10PL…) can bring great effects to the company’s profitability.

Most people may have heard of 3PL, 4PL, 5PL and other products. However, many people may not know what factors are required for each level of logistics services. At present, 3PL and 4PL are the most common and prominent services. However, the application of 5PL in the supply chain has gradually become more prominent.

What is Fifth-Party Logistics(5PL)?

Fifth Party Logistics, also known as 5PL, is a system in which an organization (client) outsources all its supply chain processes to a logistics service provider. 5PL company is committed to planning, organizing and implementing the client’s logistics solutions.

In these various supply chain processes, 5PL uses both third-party logistics (3PL) and fourth-party logistics (4PL) services and manages all networks in the supply chain. Moreover, 5PL company will set the price, but in some cases, the determined price will be renegotiated.

5PL service providers have implemented their work using the latest technology from implementing logistics solutions to negotiating rates. Like 4PL, 5PL’s business also includes this series of processes and can fully control the operational processes of the supply chain.

Fifth-Party Logistics (5PL): The Future of Logistics?
Fifth-Party Logistics (5PL): The Future of Logistics?

What Is the Key Role of the 5PL Company?

5PL service providers mainly play key roles in the following aspects:

  • Logistics plan planning
  • Organize and implement logistics solutions
  • Meet the needs of 3PL and 4PL

Unlike second-party logistics operators that do not participate in pricing, 5PL companies participate more. Besides, 5PL also includes professional work with other service providers to negotiate fixed prices. For example, 5PL also cooperates with airlines, transporters and carriers. This is the difference between 5PL providers and other logistics companies of different levels.

Why Does 5PL Appear?

Due to the impact of the popularity of e-commerce and globalization, compared with the previous models, 5PL tends to meet the needs of future logistics companies and has an important impact on the development of today’s Internet of Things. Among them, 5PL’s online payment function simplifies the consignee’s transaction, and the convenience of the customer’s direct call centre allows people to directly respond to the quality of the service. 

All in all, the emergence of 5PL has adapted to the progress of the times, and its more scientific and technical processes will make the operation of the supply chain more efficient.

4PL VS 3PL: which one is better for you?

As an e-commerce seller, you must be familiar with a third-party logistics companies, but have you ever delved into the concept of “4PL”? What are the differences between 3PL and 4PL?

图片0807

The major service of 4PL:

  • Logistics channel optimization
  • Transportation network analysis
  • Carrier performance supervision
  • Project consulting and management
  • Inventory planning

Differences between 3PL and 4PL:

  • 1. The fourth-party logistics is usually an independent entity established by a joint venture company or other long-term contract between a customer and one or more partners.
  • 2. The fourth-party logistics organization is the transfer station between customers and other logistics service providers.
  • 3. Ideally, all aspects of the customer’s supply chain are taken over by fourth party logistics company.

In brief, 4PL can be regarded as an upgraded version of 3PL. Fourth-party logistics companies subcontract different logistics operations and coordinate and supervise them on behalf of their customers. Thus, you can choose the suitable one based on performance of your company. Generally speaking, a third-party logistics can establish a fourth-party logistics company with enough scale. Just like china division, we are available for customized packaging and seamless logistics management after owning 9000 m² effective stock area. So we can play the role of 3PL and 4PL in a better way.

How dose 3PL work?

How dose 3PL work

Third-party logistics(3PL) providers typically specialize in integrated operations of warehousing and transportation services that can be scaled and customized to customers’ needs, based on market conditions, to meet the demands and delivery service requirements for their products. Services often extend beyond logistics to include value-added services related to the production or procurement of goods, such as services that integrate parts of the supply chain. A provider of such integrated services is referenced as a third-party supply chain management provider (3PSCM), or as a supply chain management service provider (SCMSP). 3PL targets particular functions within supply management, such as warehousing, transportation, or raw material provision.

The global 3PL market reached $75 billion in 2014, and grew to $157 billion in the US; demand growth for 3PL services in the US (7.4% YoY) outpaced the growth of the US economy in 2014. As of 2014, 80 percent of all Fortune 500 companies and 96 percent of Fortune 100 used some form of 3PL services.

Third-party logistics providers include freight forwarders, courier companies, and other companies integrating & offering subcontracted logistics and transportation services. Hertz and Alfredsson (2003) describe four categories of 3PL providers:

Standard 3PL Provider: this is the most basic form of a 3PL provider. They would perform activities such as, pick and pack, warehousing, and distribution (business) – the most basic functions of logistics. For a majority of these firms, the 3PL function is not quite their main activity.
Service Developer: this type of 3PL provider will offer their customers advanced value-added services such as: tracking and tracing, cross-docking, specific packaging, or providing a unique security system. A solid IT foundation and a focus on economies of scale and scope will enable this type of 3PL provider to perform these types of tasks.
The Customer Adapter: this type of 3PL provider comes in at the request of the customer and essentially takes over complete control of the company’s logistics activities. The 3PL provider improves the logistics dramatically, but does not develop a new service. The customer base for this type of 3PL provider is typically quite small.
The Customer Developer: this is the highest level that a 3PL provider can attain with respect to its processes and activities. This occurs when the 3PL provider integrates itself with the customer and takes over their entire logistics function. These providers will have few customers, but will perform extensive and detailed tasks for them.[4]
Outsourcing may involve a subset of an operation’s logistics, leaving some products or operating steps untouched because the in-house logistics is able to do the work better or cheaper than an external provider.[5] Another important point is the customer orientation of the 3PL provider. The provider has to fit to the structures and the requirements of the company. This fit is more important than the pure cost savings, like a survey of 3PL providers shows clearly: The customer orientation in form of adaptability to changing customer needs, reliability and the flexibility of third-party logistics provider were mentioned as much more important than pure cost savings.

First party logistics providers (1PL) are single service providers in a specific geographic area that specialize in certain goods or shipping methods. Examples are: carrying companies, port operators, depot companies. The logistics department of a producing firm can also be a first party logistics provider if they have own transport assets and warehouses.

Second-party logistics providers (2PL) are service providers which provide their specialized logistics services in a larger (national) geographical area than the 1PL do. Often there are frame contracts between the 2PL and the customer, which regulate the conditions for the transport duties that are mostly placed short term. 2PLs provide own and external logistics resources like trucks, forklifts, warehouses etc. for transport, handling of cargo or warehouse management activities.Second-party logistics arose in the course of the globalization and the uprising trend of lean management when the companies began to outsource their logistics activities to focus on their own core companies. Examples are courier, express and parcel services; ocean carriers, freight forwarders and transshipment providers.

The most significant difference between a second party logistics provider and a third-party logistics provider is the fact that a 3PL provider is always integrated into the customer’s system. The 2PL is not integrated; in contrast to the 3PL, it is only an outsourced logistics provider with no system integration. A 2PL works often on call (e.g. express parcel services) whereas a 3PL is almost every time informed about the workload of the near future. As technology progresses, the methodology for notifying a 3PL of inbound workload usually falls on API integrations that connect, for example, an E-commerce store with a fulfilment center. Another point that differs 2 and 3PL is the specification and customizing of services. A 2PL normally only provides standardized services, whereas 3PLs often provide services that are customized and specialized to the needs of their customer. This is possible due to long term contracts that are usual in the third-party logistics market. Cost-effectiveness of a third-party logistics provider is only given over long periods of time with stable contract and profits. In contrast to that second party logistics services can’t be customized, concerning to the fluctuating market with hard competition and a price battle on a low level. And there we have another distinguishing point between 2PL and 3PL: Durability of contracts. 3PL contracts are long term contracts, whereas 2PL contracts are of low durability so that the customer is flexible in responding to market and price changes.

With companies operating globally, the need to increase supply chain visibility and reduce risk, improve velocity and reduce costs – all at the same time – requires a common technological solution.[10] Non-asset based providers perform functions such as consultation on packaging and transportation, freight quoting, financial settlement, auditing, tracking, customer service and issue resolution.[11] However, they do not employ any truck drivers or warehouse personnel, and they don’t own any physical freight distribution assets of their own – no trucks, no storage trailers, no pallets, and no warehousing. A non-assets based provider consists of a team of domain experts with accumulated freight industry expertise and information technology assets. They fill a role similar to freight agents or brokers but maintain a significantly greater degree of “hands-on” involvement in the transportation of products. These providers are 4PL and 5PL services.

A fourth party logistics provider has no owned transport assets or warehouse capacity. They have an allocative and integration function within a supply chain with the aim of increasing the efficiency of it. The idea of a fourth-party logistics provider was born in the seventies by the consulting company Accenture. Firms are outsourcing their selection of third-party logistics provider and the optimization process of the integration of these to a PL as an intermediary. That reduces costs and the 4PL have to have an overview of the whole logistics market to choose the ideal 3PL for all operative logistic activities. For being able to provide such an ideal solution fourth-party logistics providers need a good knowledge of the logistics branch and a good IT infrastructure. A fourth party logistics provider selects the 3PL providers from the market which are most suitable for the logistical issues of their customer. Unlike the allocative function of a 4PL in the supply chain, the core competence of a 3PL provider is the operative logistics.[12]

Fifth party logistics providers (5PL) provide supply chain management and offer system-oriented consulting and supply chain management services to their customers. Advancements in technology and the associated increases in supply chain visibility and inter-company communications have given rise to a relatively new model for third-party logistics operations – the “non-asset based logistics provider.

How to Choose a Right Third Party Logistics Provider

Choosing a 3PL service provider isn’t a very easy exercise, and you can’t be sure that the one you have chosen after much scrutiny, is going to deliver the kind of services it has promised. So, the selection process should be as objective as possible.

Here are some experience which over the years we have undertaken and delivered for similar assignments, some with much success and not.

What to consider ?
Geography : look for players strong enough in local geography, be it a local or national/international player. (If a big 3pl player does not have sufficient business in a particular geography, it will not be able to meet sudden scalability demands, labour problems, absenteeism etc).

Cost : Go for a player which is cost effective, not only for you but for others as well. (if someone is just trying to be cost effective to grab your business, they will not be able to sustain).

IT: if your IT systems are strong specially with strong SCM modules, then you need not worry about it. And if your organization is also not well equipped with systems for SCM, you will struggle because no 3PL company except a few big players like – DB Schenker, DHL-exel etc, are good enough with systems. They mostly have generic WMS for themselves and their customers.

Sector: choose a player, which has been providing services to your industry sector, this saves lots of pain in pooling the right manpower, training etc.

Our operational experience in many areas shows, that local players are much better service providers, for various reasons listed below:

their significant revenue is dependent on you, so they ensure the committed service levels.
mostly run by individual entrepreneurs, they are themselves involved and dedicated to their projects, rather than completely leaving it on their employees to run the show. Here you get an efficient leader without any cost to look after your warehouse operations.
local players are cost effective, as they generally have their own warehouse, labour arrangements, transport arrangement and they earn combined revenue so earning only a 3 PL management fee is not their only interest but entire business.

Hopefully this article can offer you hints in certain extent on how to find a right 3PL provider for yourself .