Ninety percent. That’s how many domestic Fortune 500 companies rely on third-party logistics (3PL) providers for supply chain services and outsourced logistics, according to a new report by supply chain consultancy Armstrong & Associates.
That number alone is impressive, but it becomes even more astonishing when you compare it to Amstrong’s previous report from just 3 years ago. The report from 2013 found that 46% of the Fortune 500 partnered with a 3PL. This significant increase makes one thing very clear – partnerships with 3PLs are here to stay, especially for eCommerce logistics.
Given that third-party logistics aren’t going anywhere it makes sense to ensure that your processes with your 3PL provider are as efficient and as seamless as possible. Automation of order processing is one way to ensure that orders happen quickly and without errors.
Implementing an integration between your organization and your 3PL software is a cost worth investing in, saving you time, money, and even your reputation.
Resource Savings with 3PL Integrations
The first benefit that immediately comes to mind when talking about automation with your logistics provider is a lesser need for resources. It also means a reduced need to train team members on data entry systems. Whether you have a staff that is dedicated to order entry and management, or resources that manually handles this as one facet of their job, an integration can free up those man hours for other tasks.
Integrations Provide Visibility to Inventory
An integration with your supply chain partners can provide more timely updates to inventory levels. By having a more up-to-date understanding of what you have, and what you need, there is less risk of overstocking an item or running out. This not only helps you provide better customer service but also keeps tighter control on your cash flow. With an integration, you’ll have the data you need to pull accurate reports across your entire product line.
Manual Entry Errors Can Cost Real Money
Manual entry errors are a fact. There is no getting around it. According to the book Purchase Order Management Best Practices: Process, Technology, and Change, errors occur an average of once in every 300 keystrokes. Depending on the complexity of your SKUs, that could be as many as one errors every 7 to 8 orders.
This translates into hard dollars that can be lost as a result. Returns cost online sellers between $6 and $18, and that doesn’t include items returned because they were damaged or otherwise delivered in unsaleable condition.
Validating manual entries is a means to reduce costs, but there are still dollars associated with quality checking order entry. Keep in mind the 1-10-100 rule for data entry – in essence, it costs $1 to check data entry for accuracy, $10 to clean up incorrect data entry, and $100 for errors that get through the system.
With an integration to your 3PL, manual entry is all but eliminated, and any errors can be traced either to the customer or a consistent programmatic issue that is both predictable and easily remedied.
Manual Entry Errors Can Hurt Your Reputation
At a time when a good word on social media can boost sales, and a poor review and make them plummet, your reputation is a critical piece in acquiring and maintaining your customers. So, it should come as no surprise that high error rates as a result of manual order management can take a toll on that reputation. An incorrect or poorly managed order or return can result in lost sales as quickly as being out of stock on an item or incorrect pricing.
As above, an integration can significantly reduce errors in your supply chain and order management process, helping you provide consistent order delivery and customer service.
Several studies have shown that the speed and efficiency of your supply chain can have a direct impact on customer satisfaction. When orders are managed manually, data entry times can be inconsistent. Additionally, a manual system has an upper limit, and scalability depends on resourcing.
An automated solution, even one that is batch processed, provides consistent and hands-off uploading of your orders to your 3PL. Orders can be handed off to your supply chain partners even on holidays or in the middle of the night.
Many eCommerce vendors prefer to leave the order handling to the experts, partnering with a 3PL for logistics. But to fully take advantage of the value to your business, vendors should consider implementing an integration between their systems and their partner’s. Automated order processing and management will save you time, money, and improve your customer’s satisfaction.