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How Digital Fulfillment is Helping 3PL Companies Provide Effective E-commerce Logistics in 2023

The 81% demand in the 3PL logistics over the last decade has optimized the working scenarios.The digital fulfillment approach is enhancing e-commerce logistics

Team Hopstack
October 20, 2023

In this blog

“It is people who solve the problems. Technology just aids the solution.”

The owners of 3PL companies have understood this and adopted digital solutions to optimize their operations at the fulfillment centers. This owes to the fact that the 3PL companies’ market demand surged by 81% over the last decade. With a minor pour in 2019, the market demand has again surged by 30% in 2022. The demand of 3PL companies showcases their significant contribution in the supply chain disruption. These companies have adopted technology to construe omnichannel strategies. Further, we understand all about the 3PL market and how digital fulfillment is helping these 3PL companies provide effective E-commerce Logistics in 2022 and further years to come.

Why 3PL Companies?

The e-commerce companies mostly outsource their logistics to these top 3PL companies for their ability to provide same-day deliveries or two-day shipping. The other benefits include:

  • Helping businesses focus on their core products & product development cycle.
  • Opening doors to new markets and a broader customer base.
  • Enhancing customer experience in terms of product as well as delivery.

In all, e-commerce 3PL companies entirely handle the logistics of the businesses with a lot of flexibility, scalability, and cost-saving.

Digital Fulfillment in 3PL Companies & its Benefits

Digital Fulfillment in 3PL Companies & its Benefits

Latest technologies like machine learning, artificial intelligence and data analytics are no more buzzwords in the 3PL market. Each vertical of a 3PL company is made digital by inclusion of these smart technologies to impart benefits that enhance the e-fulfillment operations.

A Digital Warehouse/Center

All the inbound, storage, and outbound Warehousing operations need subtle precision, accuracy, and data maintenance. A digital warehouse achieves these goals by eliminating all the physical entries in multiple excel spreadsheets. There are barcodes and other electronically enabled entries for all the products. The smart inventory management system readily updates these data entries automatically through scanning devices. The AI-powered put-away and picker routes optimize the operations and movement in a warehouse.

Key Benefits

  1. Increased Transparency: There is subtle access to real-time tracking of the entire inventory at the SKU level.
  2. Automated Inventory Management: The inventory data is used to avoid losses associated with overstock or stock-out. The smart inventory algorithms forecast market demands and suggest stock level recommendations at SKU level. Furthermore, it helps automate the reorders by significantly reducing the human intervention and time invested in it. It also aids in timely regulating and auditing the inventory.
  3. Smart Storage & Intelligence: The smart algorithms also help strategize the storage locations to optimize entire inventory management. The proprietary picking algorithms coupled with picker route optimization provide utmost accuracy and precision, therefore, combating wrong product delivery. This saves overall time and costs involved in warehouse operations.

Digitalized Order Management & Order Fulfillment

A technology-powered order management uses an omnichannel fulfillment approach. This is an e-fulfillment concept that includes: operational directions for order returns; associating placed orders from the inventory based on FIFO or FEFO compliances and smart batching of orders based on different parameters (like the customer, location, shipping carriers, etc.)

Key benefits

  1. Smart Data Management & Analytics: Automated order management and digital fulfillment can be considered as a surveillance meter of the entire fulfillment for e-commerce and logistics in the supply chain. The real-time tracking of the time the order is placed up till it is out for shipping helps detect flaws where operations are stuck or are going wrong and further assess the areas that can be improvised for better efficiency. The real-time data also helps analyze the order cycles, which can be used for stock updates and forecast sales of products in different time intervals.
  2. Reduce Human Errors: All the data entry processes are automated that minimize the scope of errors while making or updating order entries in the spreadsheets.
  3. Multiple Warehouse Management: The prime benefit of fulfillment digitization is that it enables the management of multiple warehouses and fulfillment centers at the same time, thereby, saving a lot of time, costs, and all the resources involved in the process.

Digital Packaging

Digital packaging algorithms have enabled the safety and security of all the products by reducing any damage or theft. This has cushioned the products and branding conscience of businesses. The packaging takes into account all the parameters of the product like the size, shape, criticality, fragility and other parameters that ensure overall security of the products. Additionally, digital packaging can accommodate hardware integrations that ease the manual processes involved in packaging like stacking, wrapping and sorting the orders. 

Key benefits

  • Reduce Time & Costs: The process reduces costs that occur due to product damage and returns. Hardware integrations and use of smart equipment like digital measuring devices and automatic weighing scales save a lot of time involved in packaging and sorting.
  • Environment Conservation: Digital packaging reduces material wastage. Hence, this benefits the environment ecology with less cardboard or plastic made into landfills.

Digital Transportation & Shipping

Digitization in this section of fulfillment for e-commerce is done to select the best carrier options amongst the available choices and accommodate maximum products in a container or a trailer. The best batches and best routes accompanied by real-time product delivery tracking for customers have made it to the must list.

Key benefits

  • Fast and accurate shipping at low costs is the prime benefit of digitized transportation & shipping.
  • Better Customer Experience: The real-time delivery tracking enhances the customer experience with live updates.

Why should E-commerce companies choose highly digitized 3PLs?

The e-commerce companies understand the customer expectations of same-day delivery or two-day shipping at minimal costs. This is ensured by outsourcing the logistics to extremely digitized 3PL companies that have automated data and processes. The 3PLs drive down the errors and eFulfillment costs and enhance the overall customer experience. In contrast, the traditional 3PL companies have become incapable of providing such services. Traditional 3PLs are also less likely to survive the budding competitive market where different challenges keep surfacing (like container shortage). However, digital 3PL companies are orchestrated to perform well in any unforeseen fluctuations with all their experience, expertise, and smart technology backup. Digital fulfillment transcends the entire supply chain by its subtle visibility, control, and optimization across multiple centers at the same time. The additional outcome is the time compression factor.

As per analysis, a digital warehouse powered by an integrated SaaS platform like Hopstack has boosted the e-commerce fulfillment with a 97% gain in picking rate, 295% reduction in packing rate, five times faster batching time, and double the improvement in daily fulfillment targets. Schedule a demo today to optimize your e-commerce 3PL digital fulfillment center.

Digital Fulfillment by 3PLs in 2022 

The third party logistics is expected to expand at a compound annual growth rate (CAGR) of 8.6% from 2022 to 2030. A report suggests that the order volumes grew for 79% for 3PL providers in the previous year of 2021 yet it resulted in losses worth $228 billion to the US economy, owing to the inventory data distortions. These future predictions and past data analysis ascertain the importance of 3PL functioning in the ongoing supply chain disruption. The year 2022 is crucial for the 3PL companies to ramp up their efficiency to provide tactful solutions. Digital fulfillment is the only key that is helping 3PL companies revise the distortions and further align their ecosystem. Digitization is proved to be the aiding solution that delivers strategic insights, risk management and overall effective e-commerce logistics in 2023.

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