Date: November 19, 2020
Cyber Monday is quickly approaching and in-store Black Friday shopping is expected to be significantly less frenzied. However, third-party logistics (3PLs) warehouses know that the 2020 ecommerce holiday shopping season is shaping up to be unprecedented. Ecommerce revenue has grown more than 18% this year and most retailers and suppliers have experienced peak season order volumes since mid-March. Many warehouses have spent the last six months preparing for this season by implementing operational best practices, moving to paperless workflows, increasing their marketplace integrations, and looking for software to automate complex supply chain operations.
As order volumes grow week over week, 3PL warehouses and their customers must implement tools to not only manage efficiencies in the warehouse, but also manage the upstream order process. This is especially important as, products come in and out of stock, inventory is split across multiple facilities and geographies, and consumer demand is pushing for next day delivery. Utilizing an order management system (OMS), or integrating with a supplier’s OMS, offers more functionality and options for the ordering experience and helps streamline a 3PL’s pick, pack, and ship operation necessary to handle the largest volumes ever seen across the industry. By leveraging an order management system in combination with a warehouse management system (WMS), 3PLs can divide and conquer the responsibilities of completing the order lifecycle.
In times of peak processing, solid order management will reduce labor and shipping costs while increasing service level agreement (SLA) compliance and customer satisfaction. Order fulfillment rules around availability, origin, rates, costs, and time to delivery become more meaningful and more complicated—especially for drop shippers and fourth party logistics (4PL) providers. The important piece for many shippers is making sure orders are shipped to and from the appropriate designations and that it is cost effective. Applying OMS rules to route orders is one of the most beneficial ways to accommodate this. Automation can offer sophisticated workflows leveraging the order management system to extend the functionality of independent carts and provide more options to meet delivery SLAs.
Rules-based order management becomes even more critical during peak seasons when rate shopping isn’t always the top priority. Finding in-stock items, splitting orders across multiple fulfillment centers when out of stock scenarios occur, order consolidation, backorder management, and considering delivery SLA’s based on past performance are all required to meet the strict delivery requirements—especially those of top brands and retailers. These scenarios are too complex for spreadsheet analysis and having multiple fulfilment center options can be a critical path to fulfillment success in the busiest of times.
Historically, being unable to split orders, identify product availability across multiple locations, and consolidate inventory for online ordering meant 3PLs and their customers would lose out on sales and revenue. Similarly, inaccurate inventory or poor warehouse management connectivity would mean going to extreme manual measures to meet order commitments. These limitations put a tremendous amount of pressure on the third-party logistics warehouses to help their customers fulfill orders, serving as their manual order managers.
Thankfully, order management systems and warehouse management systems work synergistically in a 3PL environment to minimize unfulfillable orders and minimize manual manipulation within the warehouse. Order management tools are designed to do the heavy lifting of the order logic and routing between the shopping cart and the fulfillment center. By correctly routing orders to the best origin, the only thing the warehouse needs to focus on is quickly and accurately fulfilling orders as they are received. Here the WMS software shines, allowing for targeted picking, packing, and shipping. The warehouse operator doesn’t need to concern themselves with where the order came from, what configuration it was in, how it was split up, etc. The order management system then trusts the return data such as the tracking number to designate completed fulfillment, and accurate inventory updates from the WMS to keep the supply chain full and inbound orders flowing.
During peak season, it’s not unusual for a warehouse to be pushed to their warehouse storage capacity and fulfillment limits to meet customer expectations. Incorporating an order management system between the marketplaces and the warehouses is an excellent way to automatically distribute order volume across multiple facilities and allow warehouse operators to concentrate on pure fulfillment. Additionally, order management software can serve as an extension of the marketplace to ensure that online customers receive their orders on time while reducing bottlenecks and reducing costs to 3PL warehouses and their suppliers.
If interested in receiving a demo of a warehouse management season that will assist your warehouse in the ways described above, click here and one of our experts will help.
With a unique background in both the supply chain and software development, David has been one of the primary architects of our award-winning, cloud-based warehouse management products. His background includes such diverse posts as Vice President of Technology for Logistix Services and Director of IT for B.E. Logistics Inc. David's duties include managing the lifecycle of our products, including roadmap planning, development scheduling, specification writing and training.
3PL Central provides cloud-based WMS solutions for 3PLs so they can transform paper-based, error-prone businesses into service leaders focused on customer satisfaction, efficient operations, and growth.