Third Party Logistics

eCommerce third party logistics (3PL) fills a very specific need in the ecommerce industry by making it easier for e-retailers to get their products to customers efficiently. As behind-the-scenes partners, they have a direct impact on a seller’s customer service and profitability. They also allow sellers to focus on product development and business growth strategies.

But 3PL companies need support too, especially when they’re just getting started and are poised for growth. Automated storage and retrieval systems (ASRS) are a powerful tool for keeping logistics operations organized, accessible, and secure. Let’s take a closer look.

What is 3PL Distribution?

At its simplest, 3PL is a method of outsourced order picking, packing, and shipping. 3PL companies provide warehouse space and workers to fulfill orders accurately and quickly on behalf of retailers, ecommerce sellers, and even small vendors who sell through sites like Etsy.

With the expansion of ecommerce in recent years, the 3PL industry is growing rapidly, predicted to expand by over 7 percent by 2027.

Many ecommerce companies turn to 3PL when they reach a point where they’re filling more orders per day than they can sustain, especially if it appears to be a long-term trend (i.e. not just a temporary spike in sales). Other retailers choose to work with 3PL providers when they max out on product storage or warehouse space or the workforce needed to manage order fulfillment in-house.

ASRS Features for eCommerce Warehouse Operations

The name of the game in 3PL is organization. That allows for secure storage, responsiveness to retailers and consumers, and minimal errors. According to a recent study, 98 percent of 3PLs agreed that over the last three years, it has become even more critical for 3PLs to develop the capabilities to respond to customers more quickly with accurate and timely information.

Designated Space for Products

Logistics providers can turn to automated storage and retrieval for help. Vertical and horizontal automated storage systems provide a designated place for each product so there’s no guesswork or searching through bays or boxes. Each retailer’s products stay separated, quantified, and secure.

Integration of Order Pick Lists

Order pick lists can be integrated with ASRS software to call up the correct shelf at the touch of a button or scan of a barcode, so it’s clear which item to pull. Workers can even pick multiple orders at once without mixing them thanks to batch picking capabilities in the software. The same software also tracks inventory levels and replenishment needs.

Guidance for Human Workers and Expanded Floor Space

Pick-to-light add-on features for ASRS machines guide workers to the correct bin for small items. What’s more, vertical ASRS units in particular help save floor space because shelves are efficiently loaded and configured into the compact footprint of the machine.

3PL Company Case Study

One 3PL company that took advantage of ASRS is Ft. Lauderdale, FL-based ShipMonk. As a growing 3PL company with limited floor space, they needed a way to store more products and pick orders efficiently. Kardex’s vertical lift units helped them provide new services like returns management, subscription box prep, and inventory tracking. Expanding storage and retrieval capacity also meant overall volume and turnaround time increased, bulk shipping costs were reduced, and this extra savings was passed along to their customers for a big win-win situation.

How ASRS makes 3PL Providers Better eCommerce Partners

To be successful, a logistics company must offer its customers true partnership and value-added services that count. Some services ASRS enables include:

  • Inventory management
  • Product kitting and subscription box prep capabilities
  • Batch tracking and stock rotation for items with time-sensitive or freshness dates
  • Return processing
  • A business model suited to large or small product lines
  • Choice of generic or retailer’s branded packaging
  • Software that integrates with online shopping cart systems to pick, pack, and ship orders as they come in
  • Order accuracy and the ability to keep each retailer’s merchandise segregated

Product security and inventory shrinkage reduction are also critical. According to the 2020 retail security survey by the National Retail Federation, “after years of relative stability, the shrink rate jumped to an all-time high in FY 2019. Roughly seven in 10 [survey respondents] reported a shrink rate of 1% or higher, compared with slightly more than half in FY 2018.”

ASRS units can be equipped with security features like password protection and settings to restrict access to certain shelves or entire units. This helps ensure items don’t become misplaced or lost.

Ready to take your warehouse and logistics operations to the next level? Contact Kardex Storage Systems today to see what ASRS can do for you and your ecommerce customers!

Tags: 3PL companies, Automated Storage and Retrieval Systems, Blog, Vertical storage solution

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