How Can Manufacturers Use 3PL Inventory Management To Sell In The US?

Approaches to ship or deliver products for online sale in the USA

3PL or third-party logistics refers to outsourcing most or all the processes that form part of the supply chain to a third-party business, from receiving product orders to warehousing and finally delivering it to the customer.

Shipping efficiency
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What is inventory management? 

Inventory management is the process of auditing an inventory at different levels of the supply chain. It is necessary to ensure that the business maintains the right inventory at any given time. The process, therefore, is a checkpoint to prevent understocking and overstocking.

The idea is to identify inventory related trends and ensure that there is always enough stock to manage customers’ orders.

Needless to mention, the inventory management process becomes complicated as inventories are often massive in scale.

How do manufacturers benefit from tying up with a 3PL company for inventory management?

While business owners focus on the core business tasks, their 3PL partner takes responsibility for picking up orders, transportation and shipment across international borders, inventory management, order fulfillment, billing and returns with real-time updates to the business owner. Besides these 3PL warehouse management strategies, they are also in charge of customer services.

For a manufacturer, inventory refers to a record of products through these supply chain stages: pre-order stage (production), order stage, and post order stage (delivery and returns management).

What are inventory management systems? 

Inventory management systems are technological tools and processes that audit the inventory through its movement across the supply chain.

They ensure that your business maintains an optimum level of the right inventory at the right time, preventing overstocking or understocking.

Warehouse management systems are software that integrate, simplify and automate the tasks of managing warehouses to use space, time, money and people optimally.

Warehouse management software also enables monitoring inventory and space in real-time, scanning staff performance and productivity, predicting demand, and streamlining order fulfillment tasks. With statistics and trends recorded over time, it also helps to predict demand and restock optimally.

3PL inventory tracking and management steps

A 3PL business undertakes the following tasks to streamline order processing and inventory management.

1. Receiving inventory

  • The order fulfillment process begins with receiving inventory at the warehouse.
  • The 3PL inventory management system keeps track of the inventory in the warehouse and identifies the SKUs (stock keeping units) that need to be ordered.
  • It procures material or goods from the manufacturer – transports them from the manufacturer’s facility to its warehouse.
  • Receives and stores goods, marking the inbound and outbound inventory in its inventory management system.

2. Storing inventory

  • The main function of a 3PL provider is to store goods safely and in an organized manner until they are moved to the next destination of the supply chain. Warehousing facilities depend upon the nature of the product.
  • Speciality storage is required for goods that need a specific environment for safety and to maximise shelf life, e.g. cold storage for food products and medicines or special apparatus for corrosive chemicals.
  • High-security warehouse set up for expensive, sensitive or inflammable goods.
  • The 3PL performs tasks of identification, marking, placement, tracking, and retrieving goods within the warehouse.
  • The 3PL inventory management audits inventory to facilitate timely replenishment and distribution of stock.

3. Processing orders

3PL providers are responsible for receiving, tracking, and fulfilling their clients’ orders to prepare the right order and deliver it to the right place.

Once an order is received, the goods are picked and registered manually on paper or automatically with barcode scanners or other machines. The picked orders are sorted according to their destinations to ensure accurate and timely deliveries.

4. Packaging and shipping

After picking and sorting goods, the next step is to pack them securely, label them with the recipient’s address and weigh them. Orders that need special instructions for handling (e.g. delicate or fragile goods) must be labelled accordingly.

Once packed, the 3PL provider ships the order to the final destination (also known as last mile delivery). Orders may be shipped to customers directly or bundled with other orders. Scanning shipments at the various locations along the supply chain updates the shipment status, enabling customers to track their orders.

5. Processing returns

If there are returns or replacement orders, the 3PL company picks the order from the customer and transports it to the warehouse. If the customer orders for a replacement, then the order fulfillment process for the item begins again.

6. 3PL Billing

The 3PL provider generates bills to charge for its services, e.g. receiving, storing, and shipping orders.

Approaches to ship or deliver products for online sale in the USA
Photo by Claudio Schwarz on Unsplash

The need for well-structured 3PL inventory management when selling in the US especially during the COVID-19 pandemic

The US is witnessing massive growth across all sectors after the economy reopened, but companies are struggling to meet the demand due to a disrupted supply chain.

Moreover, with the COVID-19 pandemic, the demand has sea-sawed between two extremes, leaving manufacturers with either a significant share of unfulfilled orders or overstocking.

A well-structured 3PL inventory management system can cope with the fluctuating demand. It helps to source, store and process orders optimally so that a disrupted supply chain does not halt the operations or leave stock piled up.

Manufacturers can build more space for future as well as present day orders.

To sustain the competition, there is often a need for decentralized warehousing to offer quick deliveries. It also reduces transportation costs. In addition, a structured inventory management system can facilitate well-planned and optimally distributed inventory.

By integrating stock, handling and manpower planning technologies with 3PL inventory management, manufacturers can adopt flexible manufacturing practices to adjust to peaks and dips in demand.

End to end fulfillment agencies like MultiB2B offer a complete range of services including picking, packaging, warehousing, inventory management, and last mile delivery.

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