With globalization, the world may feel smaller and more accessible—but it has also gotten faster. Consumers today expect the Amazon experience every time, knowing the products they ordered will be delivered in two days or less. And consumer demand drives a chain reaction with the retailers, whose standards for suppliers are higher than ever before.
Retailers, in turn expect suppliers to operate on tight deadlines, with 100% accuracy. And failure to meet those deadlines can be expensive. Target, for example, imposes fines of up to $10,000 for inaccurate product information. If a shipment is late, the retailer charges up to 5% of the cost of the shipment to the supplier.
The Power of Inventory Management & B2B Integration
So what’s the answer? For many manufacturers – especially small to mid-size companies that don’t have extensive capabilities in-house – partnering with third party logistic providers (3PLs) can be a lifeline for handling shipping, warehouse management, inventory management, packaging and freight forwarding. But not all 3PLs are created equal. Yes, 3PLs need to have access to an efficient transportation operation, capabilities around the globe, and an excellent track record of customer satisfaction. But most importantly, 3PLs should use inventory management software and B2B integration (B2Bi) technology for complete supply chain visibility that streamlines its logistics and customer service operations.
A comprehensive B2Bi integration strategy is particularly critical for 3PLs when its customers a required to transition from a traditional replenishment model to a dropship program. For example, a 3PL that is required to fulfill a dropship program on behalf of its customer must provide timely inventory updates, private-branded packing slips and have their systems fully integrated with small parcel carrier tracking systems in order to meet strict compliance requirements from retailers and end consumers. Any little hiccup can result in penalties, delays, and loss of business. For 3PLs that have tightly integrated Warehouse Management Systems (WMS) and EDI solutions, these orders can be fulfilled quickly and accurately.
The On-Demand Warehouse: WMS of the Future
3PL providers equipped with tightly integrated solutions enable real-time inventory levels, flow rates, and visibility into shipping status. These solutions eliminate physical inventory, data entry, and shipping errors. At DiCentral, we work with a number of 3PLs on fully integrated EDI solutions. We have found that when full B2Bi with a WMS is in place, customer orders are shipped , essentially eliminating returns due to data or operational errors, and saving manufacturers from retailers’ penalties. Suppliers can also retain control and visibility of inventory, to know when their products have been picked up, are in route, or have been delivered to a warehouse.
3PLs with full integration allows it to work seamlessly with a manufacturer reducing costs and increasing customer satisfaction. It also enables the manufacturer to handle complex shipping patterns efficiently and avoid retailers’ penalties. Partnering with a 3PL equipped with a tightly integrated WMS and EDI solution, can grow a company’s business and make it more competitive in the global, fast-paced world of retail.