Automated Inventory Updates Improve 3PL Visibility

by | Jul 14, 2020 | 3PLs, Automation, Logistics

A supplier’s inventory resides in many locations across the retail supply chain. This makes accurate visibility a challenge. A supplier’s primary location for inventory is likely at their 3PL’s warehouses. Without direct visibility to on-hand inventory, suppliers rely on their 3PL to provide updated information on a regular basis. One of the automated services 3PLs can (and often do) provide is inventory status data to their customers.

This spring, SPS surveyed hundreds of 3PLs across North America and Australia, asking them about data automation. The survey’s results indicated that shared inventory details benefit a 3PL’s business, and their customers.

3PL Visibility for E-Commerce Customers

Today, approximately two-thirds of 3PLs are regularly providing automated inventory updates to their customers. The number is even higher in industries such as e-Commerce (81 percent) and consumer goods (77 percent). The remaining third of providers have an opportunity to improve their customer service and overall order fulfillment efficiency by sharing inventory data.

 

 

 

 

 

The survey showed that the value of inventory updates isn’t one-sided. Here are a few ways a 3PL benefits from proving automated inventory updates:

Visibility Minimizes 3PL Orders for Out-of-Stock Items

3PLs cannot fill and ship orders if they don’t have the items needed in stock. This is a common issue and one easily solved with automated inventory updates.

Inventory visibility empowers suppliers to know what they need to replenish in a 3PL’s warehouse. They can also modify retail orders, substituting alternative items or adjusting shipment dates to align with production. These changes ensure that they don’t send orders for out-of-stock items to their 3PL.  Instead, the supplier is in charge of managing the order changes before it is approved for fulfillment.

With only orders for on-hand inventory, a 3PL can maximize their resources and complete orders as desired.

Visibility to Inbound Deliveries of New Inventory

A 3PL also isn’t a mind-reader. They often lack visibility to shipments of new items to their warehouses. 3PL customers can dramatically improve inventory accuracy by alerting their 3PL to inbound shipments.

In-transit goods can represent a significant part of a 3PL’s future inventory. Knowing when it will arrive and what it will contain is important.  Only then can they efficiently schedule resources and update inventory levels.

Outbound Inventory to Retailers or Consumers

Shipping information can be automated to provide a 3PL’s customer with visibility to shipped orders. They’ll see the order was completed, but also know that this inventory is no longer available.

Today, more than three-quarters of logistics providers are only electronically sharing critical shipping data with approximately 20 percent of their customers. This survey response indicates that there are many suppliers who are not getting shipment updates and have little visibility to in-transit shipments or inventory.

Automated Inventory Updates Improves 3PL Visibility

What did 3PLs Have to Say about Warehouse Inventory Visibility?

SPS asked 3PLs what was the one thing that customers could do to improve warehouse inventory visibility.

  • Don’t transmit orders for out-of-stock items
  • Better communication
  • Provide more information regarding shipments before they arrive
  • Make fewer mistakes on orders and check inventory

Interested in seeing what else 3PLs will be automating in 2020? Download the free research study, Automation Priorities for Third-Party Logistics Providers.

Mark O'Leary