Cooperation with a third-party logistics provider (3PL) brings a wide range of benefits in the form of greater flexibility on the customer's side and lower unit costs, while also allowing them to focus more on their own product and added value for their end customers in their operations. However, it is fair to say that this service, in order to be performed well, also requires mastery of specific operational, communication, and technological challenges. Among the most common problems we have identified with our clients are inventory inaccuracies, high costs, poor visibility of goods flow, and difficulties in scaling during peak seasons. Why are we talking/writing about these issues? It is necessary to perceive 3PL as a very complex service and to set up a robust system and understand it very well in all aspects.
Below are some specific examples from our practice within 3PL and their solutions:
1. Inaccurate inventory and stock management
Problem: Discrepancies between recorded stock and physical stock, slow receipt of goods, loss or damage to products, difficult traceability.
Solution: Implementation of an advanced WMS (Warehouse Management System): Real-time stock tracking.
Barcodes/RFID: Automate receiving and picking to eliminate human error.
Regular cyclical inventories: Perform ongoing checks instead of one
large annual inventory.
2. Slow order fulfillment and picking errors
Problem: Low warehouse productivity, high percentage of incorrectly shipped orders (wrong product/item), inability to meet SLAs (Service Level Agreements).
Solution: Warehouse optimization (slotting): Place best-selling products (A-items) closer to shipping.
Packaging automation: Introduce semi-automatic packaging lines.
Optimized picking routes: WMS instructs workers on the most efficient route through the warehouse.
3. Limited visibility and poor communication
Problem: The client does not know where the goods are located, there is a lack of real-time data, and information about sold-out items is delayed.
Solution: System integration (API): Connect the client's e-shop/ERP directly to the provider's WMS.
Customer portal: Online dashboard for real-time tracking of orders and inventory.
4. Inability to scale (seasonal fluctuations)
Problem: 3PL cannot keep up with orders during the Christmas peak (Q4) or rapid company growth, leading to customer frustration.
Solution: Flexible infrastructure: Choose a 3PL partner that has experience with volume growth and offers scalable warehouse space.
Pre-agreed plans for peak periods: Contractual provision of additional labor and transport capacity.
5.
High and non-transparent costs
Problem: Rising transport costs, hidden storage fees, inefficient use of space.
Solution: Route optimization and shipment consolidation: Use of TMS (Transportation Management System) to reduce transport costs.
Warehouse layout optimization: Increase storage density and use of vertical space (racks).
Transparent SLA:
Clearly define fees for individual tasks (picking, packing, storage).
6. Complex reverse logistics (returned goods), especially in the case of e-commerce
Problem: Slow returns processing, inability to quickly return goods to sale, high costs of returned goods.
Solution: Automated returns process: Quick inspection, repackaging, and restocking (Returns Management System).
Use of dedicated return zones: Faster inspection process.
7. Labor shortage and safety
Problem: High turnover, difficulty finding qualified operators, safety risks in the workplace.
Solution: Investment in automation and robotics: Reduces dependence on manual labor (e.g., AMR robots, conveyors).
Training and modern handling technology: Increased safety and work efficiency.
For us at Rubikon, working with risks and eliminating them has always been a top priority in order to provide a service that will keep our customers satisfied in the long term. Yes, we could simply list all the advantages that using 3PL services brings, but we are primarily focused on solutions, and these must be provided with regard to the needs of the service in question so that it can be truly effective and the customer can focus on developing their own business and leave logistics to the experts.
So how do you choose the right 3PL to minimize these risks? We will be happy to answer this question and become your long-term and trusted partner.