The Most Important WMS Functions for Third-Party Logistics Companies

By: on October 22, 2015

3PLs have special needs when it comes to warehouse management systems (WMSs), particularly in terms of which WMS functions they seek. Why? Companies that have warehouse inventory owned by other companies must put away, pick, pack and ship items in accordance with the varying needs of multiple clients. This means they need WMS software that has robust functionality and can be extensively configured out of the box.

One of the best ways to determine if WMS functions are mission-critical for 3PLs is to listen to what real 3PL workers have to say about their current challenges and what they need in new software.

To do this, Software Advice analyzed our interactions with 309 3PL buyers searching for best-of-breed WMS solutions from August 2014 to August 2015.

The following report will help you decide, based on the needs of your professional peers, what functionality to focus on when searching for a new WMS.

Barcode Scanning Is Most Requested WMS Capability

We first analyzed the functionality needs of the buyers in our sample to determine which ones logistics providers should focus on.

Unsurprisingly, support for barcode scanning (also known as RF, for “radio frequency”) is the most requested WMS functionality, followed closely by electronic data interchange (EDI), which is a set of standards for transmitting electronic documents, such as invoices, between partners:

Most Requested WMS Functionality

Most Requested WMS Functionality

Barcode scanners are widely used across various warehouse types and supply chain roles, which explains why this capability is so frequently requested.

Nearly a Quarter of 3PLs Want EDI and Slotting Capabilities

Like barcode scanning, EDI has widespread applications in the supply chain. For 3PLs in particular, EDI can simply purchase order processing and invoicing.

The fact that just as many 3PLs want slotting as EDI capabilities is surprising, given that slotting modules still aren’t universally included in WMS solutions. Slotting modules factor in metrics such as pick velocity (how often an item is picked) in order to help you determine the best layout for your warehouse space.

So why is slotting in such high demand? 3PLs store inventory owned by multiple clients often within a single warehouse—a setup that increases the potential for mispicks and other mistakes. Indeed, some buyers specifically state that they need a slotting module in order to organize the warehouse’s physical layout according to individual customers.

Inventory Reports, Client Web Portals Increasingly in Demand

Reporting, especially for inbound and outbound operations, is a very popular function among members of our sample. These reports are, in many instances, primarily requested and used by 3PL clients. In other cases, organizations use them to calculate fees for clients; indeed, a number of buyers in our sample state that they primarily want to use reports for billing purposes.

Finally, client Web portals (Web pages that allow clients to log in and view inventory levels, shipment history and other information) are highly important for logistics providers. We compare the specific features offered by various WMS vendors’ Web portals in this guide.

3PLs Need More Inventory/Warehouse Management Functions

While it’s important to know the features your competitors are focusing on, you can also learn what to look for in a WMS by analyzing the bad experiences of current users.

The following chart shows the pain points of only those 3PLs in our sample who are currently using commercial WMS software

Top Reasons for Evaluating A New WMS

Top Reasons for Evaluating New Warehouse Management Systems

More of these buyers complain about limited warehouse management functionality than about any other issue. This includes capabilities for managing putaway, picking, packing, shipping and other crucial warehouse operations.

Inventory management (IM) functionality includes counts, adjustments, moves and other inventory operations. More than five times as many 3PLs complain of a lack of warehouse management functionality than that they are lacking IM functionality. This is somewhat surprising, since we excluded respondents who exclusively rely on inventory management software from our sample for this chart.

Four percent of our sample complain specifically about the lack of 3PL billing modules in their solutions. You can evaluate vendors that offer 3PL storage and value-added services billing using our guide to 3PL WMS features.

Finding a Supported, Scalable System Is Critical for 3PLs

Given that WMS software can take many months to implement, finding a vendor that offers the support you need is critical—and our buyers clearly realize the importance of good support.

What’s more, WMS systems generally require extensive configuration after purchase to set up the features you need, and in some cases, source code modifications will be necessary. Reading reviews of WMS software can help you make an informed decision about the quality of a given vendor’s support.

Difficulty of use is another top factor influencing 3PL buyers’ decisions to replace their software. Make sure the functionality you need is possible within standard configuration settings—because source code customizations can be costly, difficult and prone to bugs.

Seven percent of buyers are getting rid of their WMS solutions because they can’t support multiple warehouses. Beginning with a solution that can scale with your long-term growth plan is one way to avoid this problem. If you foresee growth within the next five years, it might make sense to invest more up front than to replace your WMS after a few years because it can’t keep up.

Now that you’ve examined your competitors’ problems with their existing WMSs and the functionality they’re looking for in new solutions, you’re ready to begin comparing systems. You can download our feature comparison guide to examine how leading systems measure up in areas such as slotting, system-directed putaway and picking, inventory control and workforce management.

For more information about our methodology, click here.

If you have comments or would like to obtain access to any of the charts above, please contact

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