The 3PL warehouse has radically changed in the last 10 years. Traditionally, outsourced warehousing and long-term storage were the name of the game. In some instances, 3PLs might have also taken on distribution, but this was largely cross-dock and last-mile, full-truck movements.
The rise of ecommerce has upended that 3PL model.
What’s changing?
- While there’s still a place for the old truck-in, truck-out model, it’s not where newer 3PLs are staking their claim.
- Smaller footprints or parcel volumes mean more SKU diversity and client counts to fill the same buildings.
- You aren’t putting 26 pallets on a truck; you are putting thousands of small parcels onto the UPS truck daily.
- You aren’t efficiently storing pallets but managing active and reserve locations with pick and sortation bins.
It’s a lot, and that’s all while the broad consensus of the market is that 3PL margins have never been tighter.
If the business has changed, both in customer expectations and 3PL services rendered, why do we keep making the same mistakes?
The hardest problems to fix are the ones you don’t know about. Meet with us to identify costly challenges in your 3PL warehouse strategy.
Address the problem
I consult with 3PLs day in and day out.
Every one of them thinks their business is unique. They are doing something radically different or reinventing the wheel… This is a meaningful reinvention every time; we just know it! That’s maybe true for 10% of the nuances. The core 90% is Logistics, and that never changes. That means that the mistakes don’t change either. And you’re not alone in this.
❌ Don’t try to be everything to everyone – If your 3PL is good at everything, it is great at nothing. All industries act like this is a new concept, but Adam Smith laid the core concept down in “The Wealth of Nations” in 1776. We still believe that we can do it all efficiently. No study has ever supported that. All this does is homogenize competition and accelerate the race to the bottom.
❌ Don’t delay warehouse technology upgrades – You’d be surprised at how many decent-sized 3PLs have zero focus on industrial engineering and continuous improvement. You can never win if someone isn’t focused on optimization. You are choosing a higher operating cost per unit. Period. If you don’t adopt 3PL solution upgrades as you grow the business, you delay or end your top-line growth. You will lose even the most loyal customers in the long term as they pursue better services or costs from your competition.
❌ Don’t make poor software choices – Everything in modern business runs on the core rule “garbage in, garbage out” to some degree. Relying on outdated fulfillment systems that don’t have 3PL enabling processes – or none at all – is a recipe for disaster. It makes everything take more of everything: time, money, morale. Your business as a 3PL is about efficiency – how well you execute and how that impacts your bottom line. A good software investment reaps multiples in efficiency and margin.
If you are growing, you deal with one or all of these issues. The first step is always acknowledging you have a problem. The last step is fixing it. And you have the power to do that.
Create lasting change with your 3PL strategy
Only some things have to be monumental capital expenditures that take years to deploy. Continuous improvement shouldn’t be done in a linear fashion. You should tackle things in terms of the time to deploy and roll out quick wins alongside transformational efforts.
After implementing Deposco, they saw a 2X productivity increase during Weeks 1-4. Within 75 days, they were forecasting a 2X run rate within 6 months on the platform.
Short Term
✅ Fix your data processes. Start capturing and updating accurate product data—dimensions, weights, and shipping categories. This should not be limited to existing systems; look at paper processes, external communications, and everything else. Document, standardize, and maintain.
✅ Get an industrial engineer – Even a recent grad can map processes and find quick, impactful improvements. Hiring an industrial engineer should be a less-than-six-month ROI, almost a certainty, guaranteed.
✅ Do deploy low-cost automation — If you’re doing something repetitive, look for low-cost automation. Conveyor lines, sortation lines, and auto-bagging solutions don’t have to break the bank but can have a big impact on efficiency.
Medium Term
✅ Explore scalable Warehouse Management Software. Choose a WMS that supports adaptable workflows. Focus on solutions with 3PL features, both internal and customer-facing. Consider supplementary systems like order management that further codify efficiencies and savings.
✅ Explore simple, high-ROI automation — 3PL automation is not that hard or inaccessible. Start with simple solutions—a conveyor line or a sortation system. The ROI can be surprisingly quick.
Long Term
✅ Do build specialization. Focus on a specific market segment, like cold storage, jewelry, or ecommerce. Identify the capabilities expected by those markets and be obsessive. No one ultimately wins in price wars; you build longevity on an ICP that you serve inimitably.
✅ Consider advanced automation and RaaS (Robotics as a Service) – Explore RaaS – Robotics as a Service – a way to experiment with advanced automation without a big upfront investment. It’s flexible and lets you adapt as you go.
Related Read: Supply chain automation: Sizing up the productivity potential of MHE in your warehouse
Do something
78% of 3PL companies across the globe reported managing growth and capacity as their top challenges. Get powerful strategies to alleviate growth.
No matter what you focus on, get started today with your scalable 3PL warehouse strategy. Every product touched, order processing, and day working in your old fulfillment system or setup is burning money. Likely, it’s quietly costing you repeat business and brand loyalty, but that’s harder to measure. If you don’t address these issues in the short term, you risk losing your competitive edge and market share.
You didn’t get into the 3PL business to keep doing the same-old, same-old. Your approach was better than anyone else’s in the market. Being excellent at what you do – today, tomorrow, into the future – is how you prove it and carve out your market niche.