Best Practices for 3PLs with Multiple Clients in Different Industries

Posted by Melroy Coelho on Oct 12, 2016 1:18:33 PM
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Color, Style and Size Tracking


In the fashion industry, tracking the color, size and style of inventory in an efficient and accurate way is essential in any WMS. Some 3PL providers prefer to use inventory levels for tracking purposes, while others opt for inventory attributes at the item level.

With tracking by inventory level, the usual four-level setup is style/color/size/LPN. With tracking by inventory attribute, only one inventory level – UPC code – is required; color, size and style are attached at the item level as inventory attributes.

Tracking by inventory level offers more reporting options than does tracking by inventory attributes. You can choose from dozens of inventory reports showing exact counts and subtotals for each style, color and size in your warehouse. The same is true of your inventory look-up programs; you can query by style, color and size and see exact counts and locations for each inventory level.

Tracking by inventory level also offers more flexible billing; you can bill at any inventory level and your customer will see a charge for each style, color or size shipped out of the warehouse. With tracking by inventory attribute, on the other hand, you can only bill by level 1 or UPC code and style, color or size information will not appear on your invoices.

Count Backs

A countback is an inventory count that occurs during the picking or loading of product. Count backs offer a number of advantages over scheduled cycle counts and physicals. Virtually no setup is required and the busiest locations are automatically counted more frequently than the less busy locations without the need to set up complex rules. On the other hand, count backs can slow down your picking considerably. And if your pickers are poor counters, count backs can lead to a lot of false positive inventory discrepancies that are time-consuming and expensive to resolve.

So what are the “must have” options for count backs that any 3PL solution should offer? As in any 3PL solution, count backs must be fully configurable by customer. That is, activated or deactivated at the customer level. Do you want to a count for each pick, every second pick, every fourth pick, every 10th pick, etc. or only when the on-hand quantity falls below a certain threshold quantity? All these options should be fully configurable.

If the count back quantity does not match the on hand quantity, what do you want your 3PL solution to do? Create an inventory discrepancy record, require a supervisor override, prevent the order line from being picked or allow the pick but do not allow the order line to be loaded?

If you select the supervisor override option, does you 3PL solution generate an automatic email notification and send it to a group email address for supervisors? The email should summarize the problem and identify the location.

Customer Relationship Management

A good CRM tool should be part of any WMS solution. It allows you to track events — whether planned or unplanned — that are beyond the scope of normal receiving/shipping such as internal maintenance issues as well as claims and damages management.

In a good CRM system, work request types should be fully configurable; that is, you define the types that you need to meet the specific needs of your warehouse.

The different statuses of a work request – open, assigned, reassigned, resolved, completed, etc. – should all be time stamped whenever the operator selects a new status. And the total elapsed time for a work request should also be tracked.

A good CRM system should allow multiple operators to enter their time against a single work request and should differentiate between the operator who is primarily responsible for the work request and the operator(s) who actually perform the work.

You should be able to attach a work request to a specific order, receipt or inventory entity and work requests should be fully integrated into your look-up order, look-up receipt and look-up inventory programs.

For 3PL operators, a chargeable or non-chargeable option is essential. That is, the work request can be billable to the customer whose inventory is the source of the problem and the charge is fully integrated into your billing and invoicing system.


Customer visibility software has become an essential tool in any 3PL solution. It allows 3PL customers to look up the status of an order or receipt, the order or receipt detail, inventory balances, inventory transactions, item information and invoices.

Does your 3PL solution support drill down capability, allowing your customers to drill down multiple levels to find greater and greater detail about a receipt, order or item? For example, can they search for a given receipt and view summary information about the receipt? If they click on the receipt number, can they drill down to the receipt header? If they click on the shipper code, can they drill down a further level to find general information about the shipper?

A good 3PL solution should allow your customers to submit receipts and orders without the need of an ASN or EDI. The customer visibility software will validate the receipt or order submitted and issue the corresponding receipt or order number

Other questions you should ask when evaluating customer visibility software:

  • Does your customer visibility software support POD’s (Proof of Delivery); that is, track the delivery status of outbound orders?
  • Can you specify the maximum number of operators that can use your customer visibility software at any given time?
  • Can you allow/disallow the placing of product on hold?
  • Can you allow/disallow the use of scheduled queries?



Capturing the expiry date for inbound product is essential in those industries such as food processing and pharmaceuticals in which expired product is not safe and cannot be shipped. A good 3PL solution should offer many different options for capturing expiry dates as different customers may have different ways of calculating expiry dates.

The simplest form of expiry date capture is manual entry in your receipt entry program. Some customers, however, supply expiry dates in an encoded product date or date code format as part of an inventory level; in those cases, you will need a formula to convert the code to DDMMYY format automatically. Does your 3PL software allow you to create custom formulas for different date code formats?

Other customers use the receipt date as a production date and add a specified number of days or months to this date to arrive at a product shelf life. Can you manually override this shelf life in your order entry program for a specific order line?

If product arrives in your warehouse with a predefined shelf life that is less than the minimum shelf life required, will it be automatically rejected? If it is rejected, does a supervisor have the discretion to override the rejection and accept the product?

Tracking expiry dates with hold codes is also important in any inventory management system. Does your 3PL software automatically place hold codes on expired inventory so that it will never be shipped? What about stale inventory; that is, older product that is not yet expired. Is it placed automatically on a stale hold a certain number of days before expiry and does this hold automatically change to your expired inventory hold on the product’s expiry date?

And are your expiry date/shelf life rules fully configurable at the item level; that is, item A requires a manually entered expiry date while item B derives an expiry date automatically from an inventory level.

These are all important points to ponder for the 3PL operator in the food processing and pharmaceutical industries.

Isolator Zones

Isolator zones serve two key functions in any WMS during directed put-away:

  • They allow you to keep certain products separate from each other within the same area. For example, you keep both fish and cheese in your cooler area but for obvious reasons you do not want both products sitting side by side in the same location or adjacent locations. Isolator zones allow you to keep both products separate from each other.
  • They allow you to keep similar product together. When similar product is kept together, you avoid a situation where product is dispersed in numerous locations in your warehouse and as a consequence is time-consuming and expensive to pick.

So what are the “must have” options for isolator zones that any 3PL solution should offer? First and foremost, isolator zones should be user-defined based on the particular needs of your warehouse. You could divide up your warehouse by customer: customer A, customer B and all other customers. Alternatively, you could divide up your warehouse by product: fish, cheese and all other products. Or you could divide up your warehouse by product velocity: meat fast-moving, meat medium moving and meat slow-moving.

A good 3PL solution should support overflow isolators. That is, when you receive product and all locations in the primary isolator zone for that product are full, product should be directed to the first overflow isolator. If the first overflow isolator is full, product should be directed to the second overflow isolator (if any). You should be able to define multiple overflow isolators for the same item and specify the sequence in which the software will query isolator zones in search of empty locations.

Another “must have” option for isolator zones is the ability to specify whether or not an exact match of product and location isolators is required when selecting put-away locations. The four basic options are:

  • ignore isolator codes
  • use only exact match isolator code
  • use any overflow isolator code

use any isolator code other than exact match or overflows

Picking Substitution

Picking substitution allows RF operators to pick product other than the allocated product on the order line. It is designed to achieve faster picking and increased productivity for the warehouse by allowing operators to pick the most accessible product in a given location or area without sacrificing FIFO or other picking requirements.

So what are the “must have” options of a good picking substitution module? For a 3PL operator, rule number one is that your picking substitution rules must be fully configurable at the customer, item and consignee levels. That is to say, customer A can have one set of default rules for all items, another set of rules when shipping a particular item and a third set to rules when shipping a particular item to a particular consignee.

Do picking substitution rules apply to replenishments as well or are they limited to picking only? Both options should be available in your 3PL solution.

If the original order line is on hold, does the substitute product have to be on the same hold? The answer should be Yes.

As for the picking substitution rules themselves, what conditions must the substitute product meet before it can be substituted? Can the substitute product be allocated to another order? Does it have to be from the same location or location type? Must it have the same FIFO attributes? Can you specify a range in days value from the originally allocated inventory? And does it have to have the same level 2/3/4 values? If the answer to any of these questions is No, you many need to consider another 3PL solution.

Standard Messages


The ability to create and maintain standard messages such as “Must maintain at above zero degrees Celsius”, “Remind driver to chock wheels”, etc. is any important part of any 3PL solution. Standard messages should be fully configurable and stored in a central repository where they can be easily maintained.

3PL operators require the ability to attach standard messages to a specific customer or, if required, to all customers. Another essential requirement for 3PL operators is that standard messages are fully integrated into a customer’s inbound or outbound workflow. For example, when confirming receipts for customer A, display the message “Blast freezing required”. As well, standard messages should be fully supported in both desktop and RF programs.

Standard messages should also be printable when they are attached to a particular document. For 3PL operators, it is important that printing is fully configurable by customer, carrier, shipper and consignee. That is to say, print standard message A on my bill of lading when shipping orders belonging to all my customers, print standard message B on my billing of lading when shipping orders belonging to customer ABC and print standard message C on my billing of lading when shipping orders belonging to customer ABC to consignee 123.

Standard messages should be attachable to a specific inventory entity and should display when looking up inventory. Receipt entry messages should display when receiving that item, while order entry messages should display when shipping that item.

Transfer of Ownership

The ability to transfer product from one warehouse customer to another is an important feature in any 3PL solution. For example, two warehouse customers have an identical item in common. Customer A is running low on the product and asks Customer B for a specified amount.

When transferring product, are process values such as catch weights and serial numbers transferred as well? If not, there may be a lot of manual entry involved that is time consuming and prone to error.

What charges, if any, are involved in the transfer? Does the transferee pay handling charges only, initial storages charges only or all charges associated with a regular receipt? Can you apply extra charges to either the transferor or the transferee in additional to the normal receipt charges?

How does the transferred product renew? On the original receipt date or on the date that the product was transferred?

Can you define a free storage period for the transferee? That is, although the transferee now owns the product, the transferor pays renewal storage during the free period.

If your 3PL vendor cannot handle the above transfer scenarios, you may require some expensive customizations to your software.

Temperature Capture

In the food industry, temperature capture is very important in ensuring that food products are safe to eat and that all government regulations have been met. A good 3PL solution should offer a number of options for tracking both inbound and outbound temperatures.

First and foremost, temperature capture in RF receiving should be fully configurable by customer such that temperature capture can be activated for certain customers and deactivated for certain others.

Another temperature capture option of interest to 3PL providers is the ability to define the number of temperatures that are required for inbound loads. The number of temperatures to be captured should be based on load type. For example, for load type A six inbound temperatures are required (front, middle, back, setting, ambient and extra temperature), while for load type B only four inbound temperatures are required.

Another temperature option to consider is a stand-alone RF program for the entry of temperature, trailer/seal number and pallet information for a given receipt or order. In this way, it is possible to give an operator permission to enter temperature and trailer information without the right to work on actual receipt and order lines.

System Alerts

A system alert is a message automatically generated whenever a particular condition is met. Some examples of possible system alerts in a WMS are: receipts opened for more than three days, receipts received from a particular customer or shipper, orders picked with more than 10 unallocated lines, etc. An alert can either display on your screen or be sent in the form of an e-mail message.

So what should the 3PL operator look for when comparing different alert systems?

First and foremost, alerts must be fully configurable using standard SQL queries and database views so that you can easily create the alerts that you need for your specific operations. And the SQL statement that the alert is based on should be easy to look up in the event that the alert is returning unexpected results.

Other features that a 3PL operator might want:

  • the ability to show/hide any column in an alert
  • the ability to email a screen alert
  • the ability to schedule e-mail alerts for certain times of the day and certain days of the week
  • the ability to deactivate and reactivate alerts

Equipment Tracking

Do you know where your equipment is at all times and how it is being used? If the answer is no, your WMS software may be lacking an equipment tracking module.

Equipment tracking software allows you to track the equipment used by each RF operator, restrict certain activity types such as picking, packing, etc. to certain types of equipment and restrict certain RF operators to certain activity types and equipment types.

So what are the characteristics of a good equipment tracking module? Some of the things that you should look for are:

  • the ability to set up user-defined material handling types and material handling codes
  • the ability to set up fully configurable checklists for each equipment type (for example, “Brakes Ok? Y/N”)
  • the ability to attach a location to a material handling code, allowing you to look up the exact location of product on an open order as it moves around the warehouse on various pieces of equipment
  • whether or not equipment tracking is fully integrated into your look-up inventory and look-up location modules

Hold Management

A good hold management system is a key part of any WMS solution. It allows you to flag product as damaged or needing special handling such as a quality assurance inspection or blast freezing. A robust hold management system should be as flexible as possible to meet your specific business needs. That means that hold types are user-defined and fully configurable.

Some of the configurable features that the 3PL operator should look for in hold management are:

  • whether or not your hold type is shippable or non-shippable
  • whether or not renewal storage will be charged on product to which a hold type has been attached
  • whether or not the hold type is breakable (that is, you can relocate and make hold adjustments to partial quantities of an inventory entity in a given location)
  • whether or not the hold type is automatically removed after a certain number of user-defined days or hours)
  • whether or not the hold type can be used in RF

Does your hold management system support automatic processing; that is, automatically assigning a hold code when receiving or shipping a given item? Can you apply incubation holds to inbound product and can you set up a storage location such that product placed in that location is automatically assigned a given hold code?

Lastly, does your hold management system support massive hold adjustments; that is, adding a hold to or removing a hold from an entire inventory entity in your warehouse regardless of location.

Extra Charge Engine

A good extra charge engine is an essential component of any 3PL solution. It should be fully configurable to handle every possible billing scenario without the need to write custom code or pay for expensive customizations.

First and foremost, your extra charge engine should allow you to apply an extra charge to any type of account on your system be it a customer account, carrier account, consignee account or shipper account. A charge can apply to one account and be billed to another account; for example, whenever you ship to consignee A, an extra charge is created and billed to the customer on the order.

Some of the extra charge options that a 3PL operator might require in his extra charge engine are:

  • how the extra charge is applied (to an entire receipt or order, to an item, to a receipt or order line, to a lot count, etc.)
  • whether or not the extra charge is optional or automatic (an optional extra charge will prompt the operator to confirm or cancel the charge)
  • whether or not entry is allowed in RF
  • how you want to charge for partial quantities (that is, by entered quantity or by actual quantity moved)
  • whether or not to allow the operator to override the quantity
  • whether or not the extra charge applies only to product on a given hold
  • whether or not the extra charge applies only to product assigned a specific process code such as catch weight

The more flexible your extra charge engine is, the less likely it is that you will require expensive customizations to meet your unique billing requirements.

Cycle Counting

Cycle counts allows you to perform regularly scheduled counts of randomly selected inventory in your warehouse without the time and expense of a full physical inventory. Good cycle counting software should support most if not all of the following functions:

  • you can perform both item and location counts
  • you can define the number of times that you wish to count a particular item or location as well as the frequency (for example, daily, weekly, monthly, every second Tuesday, etc.)
  • you can specify the variance that you wish to allow before forcing a recount
  • you can perform both blind and non-blind counts (for non-blind counts, the number of inventory levels shown on the ticket should be configurable)
  • you can perform A counts as well as AB counts
  • you can perform both RF and paper-based counts
  • you can customize the sort sequence or “snaking” of your locations

All the above options should be configurable at either the item or location level. That is, you can define different cycle count rules for different items or locations (for example, you can count high value items on a daily basis while counting low value items on a weekly or monthly basis).

In addition to scheduled cycle counts, a good 3PL solution should also support arbitrary and event-driven cycle counts. An arbitrary count is a one-time non-scheduled count of specific items or locations. An event-driven cycle count is triggered whenever an RF operator reports a variance; examples of a variance could be the RF operator requests an alternate location, reports that a location is not empty when the last item is picked or moved from it or places product on a suspend hold. Another event-driven cycle count option is to trigger a count for each location visited while picking.

Some cycle count software allows you to update inventory based on your cycle count. This is a manual process that should only be performed on a ticket-by-ticket basis.

Time Stamp and Auditing

To achieve the highest possible level of accuracy in your inventory records, it is necessary to maintain a complete audit trail of all inventory transactions from the time a particular inventory entity enters the warehouse until such time as the last pallet, case or each is shipped out.

Each transaction should be time-stamped with the date, time and operator, the warehouse and storage location, the transaction type (adjustment, brought forward, confirmed order, confirmed receipt, entered order, entered receipt, hold adjustment, relocation, etc.), the receipt, order or adjustment number, the number of units involved, the total gross weight, the hold code (if any), the carrier (if any), the shipper or consignee (if any), the audit number (if any) and the EDI audit number (if any).

For orders and receipts, the audit trail should show the date and time for each inbound or outbound flow (for example, start picking, finish picking, start loading, etc.), any documents printed, cancelled or reprinted, any exceptions and variances encountered in RF (for example, a count back quantity that did not match the system quantity) and the operator.

A good audit report is also an important part of any audit trail. It should assign a unique audit number to each inventory adjustment and show the transaction type (manual adjustment, brought forward, hold adjustment, relocation, order move, etc.), the order, receipt or adjustment number, all inventory levels, the net and gross weight, the number of units and hold code (if any).

Inventory adjustments should be reportable to your EDI partners through an EDI transaction. The EDI transaction should be fully configurable by transaction type; that is, report a certain transaction type only or report all transaction types.

Customized Workflows

A workflow is a sequence of steps or “flows” that must be taken for all inbound receiving, outbound shipping, replenishments and relocations. Workflows serve three important functions in any 3PL solution:

  • They are a way of time-stamping a task or action (for example, recording the arrival time of a driver).
  • They allow you to attach a particular document to a particular step in the sequence and require that the document be printed before proceeding to the next step.
  • They allow you to specify at which stage in your inbound and outbound process you want to perform allocation and deallocation.

For the 3PL operator, it is very important to be able to define client-specific workflows without the need for technical skills or custom code. For example, client A is totally paper-based, the receipt has to be manually entered and the product arrives floor loaded with no pallet ID labels, while client B is EDI equipped and the product arrives fully palletized with bar code labels already applied.

Another “must have” feature for 3PL operator is the ability to set up workflow overrides for specific shippers and consignees. For example, you define a default workflow for customer A and a special workflow for customer A when receiving product from a particular shipper. Likewise, on the outbound; a default workflow for customer B when shipping to all consignees and an override workflow for one particular consignee.

Capturing the LPN (Pallet ID) on inbound receipts

Typically, there are four different ways of capturing and recording LPN numbers on inbound receipts:

  1. The most efficient method is through EDI. The customer transmits the LPN via EDI; upon receipt of the pallet, the receiving operator scans the customer’s LPN to validate it.
  2. The customer assigns an LPN to each pallet, but does not transmit the LPN via EDI. In this scenario, the 3PL application is configured to capture the LPN and validate some of the information in the bar code.
  3. For customers who do not assign LPN’s to their product, a generic LPN is another solution. That is, pre-printed serialized labels are applied to each pallet and the label is then scanned to link the inventory to the LPN.
  4. Another solution for customers who do not assign LPN’s to their product is to generate and print LPN’s from within your 3PL application. These LPN numbers should be fully configurable with a user-defined prefix, suffix, starting number and ending number.

A good 3PL solution should offer all four options and make it easy to set up different options for different customers.

Topics: 3PL

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