One of these technologies is cloud-based 3PL warehouse management systems (WMS). These solutions empower 3PL providers to onboard employees faster, get comprehensive visibility into all digital and physical activities across operations, and more. These software solutions support both B2B and DTC functionalities, empowering 3PLs to thrive in a hybrid market of retail and online channels.
Learn more about 3PL WMS, including how warehouse systems have evolved, the advantages of cloud-based 3PL WMS, how they affect 3PL providers, and future trends in logistics with cloud warehouse systems.
Evolution of warehouse management systems
Warehouse management systems have evolved significantly, moving from traditional on-premises solutions to modern cloud-based systems. This progression has changed the way businesses manage their warehouses and supply chains.
Here’s a breakdown of how this evolution in WMS has occurred.
Traditional on-premises WMS
Conventional on-premises WMS solutions are installed on a company’s local network and hardware. They are run by the company’s team and customized to meet their needs.
In the late 1970s and early 1980s, WMS applications were custom-built by the few companies that specialized in WMS applications or by a business’s internal IT staff. These early applications only met 50% to 70% of a company’s requirements. From the late 1980s to the late 1990s, the WMS industry experienced significant growth. Base functionalities expanded, giving companies more freedom to configure key functions.
Today’s on-premises WMS applications now support 80% to 90% of most warehousing requirements. They provide many functionalities, including exception-based alerts, external data visibility, and the ability to manage multiple physical warehouses within a single application server and database installation.
However, on-premises WMS software can come with several significant drawbacks, including:
- High upfront costs: Buying and implementing traditional WMS solutions can be costly since the process includes licensing fees, hardware, and ongoing maintenance.
- Complex setups: Deployment is typically time and resource-consuming. Businesses often have to adapt their operations to the solution rather than the other way around.
- Scalability challenges: on-premises WMS solutions frequently encounter scalability challenges. This means you may need to buy additional hardware and adjust your servers and IT infrastructure to support modifications to the WMS. These changes are not only expensive but often difficult to make, and may require complete overhauls of your IT infrastructure.
Modern cloud-based solutions
Although on-premises WMS solutions are still popular, there has been a recent shift to cloud-based WMS. By definition, a cloud-based WMS is stored, managed, and available through the internet. As a result, companies using a cloud-based WMS don’t need to invest in or maintain on-premises IT infrastructure.
This transition from on-premises to cloud is driven by the need for the following:
- Scalability: Cloud software is more scalable than traditional on-premises software. This means it can easily increase or decrease in cost and performance according to a business’s needs. In contrast, on-premises software requires more effort and cost when scaling up or down.
- Real-time data access: These software solutions provide access to key warehouse data, including shipping information, inventory levels, and order statuses.
- Cost efficiency: WMS solutions significantly reduce IT costs by reducing the need for in-house IT support and eliminating costs associated with on-premises IT infrastructure.
Advantages of cloud-based 3PL WMS
Many 3PL providers have shifted to cloud-based 3PL logistics software because they help them stay ahead of the game. Here are the main advantages of cloud-based warehouse management for 3PL software:
- Scalability and flexibility: Cloud WMS solutions adapt to your business needs, allowing you to scale seamlessly during growth or seasonal demand periods without investing in additional infrastructure. These software programs can also help you scale globally by using warehouse management systems and established networks to address global supply chain challenges and provide visibility into operations.
- Real-time data access: Cloud WMS software provides real-time access to warehouse data from any location. Decision-makers can use this information to monitor operations, track inventory, manage orders efficiently, and make data-informed decisions, improving operational efficiency.
- Lower upfront costs: Cloud WMS solutions require lower upfront costs and IT maintenance costs since they operate on a subscription-based model. This makes budgeting easier.
- Streamlined integration capabilities: Cloud WMS solutions seamlessly integrate with other business systems, including ERP, TMS, order management systems, and ecommerce platforms, ensuring a connected order-to-ship process.
- Enhanced security and compliance: Finally, leading cloud WMS providers have advanced security measures — such as multi-layered authentication and encryption — to protect your business and client data. They also ensure compliance with industry standards, alleviating the burden on individual businesses.
How cloud-based WMS software programs impact 3PL providers?
By adopting cloud-based WMS software programs, 3PL providers can experience a range of transformative benefits. These include:
- Improved client services: 3PL providers can use cloud-based WMS to provide better client services. For one, cloud-based WMS offer better transparency by giving clients clear, real-time visibility into key aspects of their operations, such as inventory levels and order tracking. In doing so, cloud-based WMS strengthens trust between the 3PL provider and its clients. Secondly, cloud-based WMS can provide faster order fulfillment, including same-day fulfillment, and tailored services to clients.
- Operational efficiency: 3PL providers can use cloud-based WMS to automate repetitive warehouse processes such as picking, packing, and shipping. This reduces errors, optimizes labor utilization, and increases overall productivity.
- Competitive advantage: Adopting cloud WMS also makes 3PL providers more competitive. That’s because cloud WMS come packed with innovative technology for increasing productivity, attracting and retaining clients, and boosting your bottom line. Logiwa IO, for instance, offers headless and serverless architecture, AI-driven optimization, and the ability to add features and modules for continuous innovation and limitless configurability.
The future of logistics software
As in other industries, staying on top of future trends is vital to remaining competitive in the logistics industry. Here are the top future logistics trends involving scalable 3PL WMS systems that you should be aware of:
- Integration of advanced technologies: Cloud WMS for third-party logistics is already being combined with cutting-edge technologies such as automation, robotics, AI, the Internet of Things (IoT), and machine learning. These integrations boost operational efficiency by automating tasks, minimizing errors, and providing smarter insights for warehouse management. Together, these technologies are slated to become the backbone of fulfillment processing, and their importance will likely increase in the coming years due to labor shortages.
- Data-driven decision-making: Cloud-based WMS provide access to real-time big data and AI-powered advanced analytics that can be used for demand forecasting, resource allocation, and labor management. Management can use this data to make well-informed decisions, empowering the business to respond proactively to changing operational, market, and client demands. For example, management can tap into cloud-based WMS data points to gain insights into streamlining warehouse processes, such as avoiding overstock and stockouts and improving demand forecasting.
- Digital twins: Using data science in cloud-based WMS and throughout the supply chain has become widespread in recent years. 3PL providers can particularly benefit from digital twins, which are virtual replicas of processes or objects that simulate their counterparts’ real-world behavior. Digital twins are very useful when forecasting product shortages, maintenance needs, and demand fluctuations in real-time.
- Blockchain: Blockchain is a shared, immutable ledger that facilitates the process of tracking assets and recording transactions in a business network. While still emerging, this technology is anticipated to play a large role in cloud-based WMS and the logistics industry more broadly. Because blockchain independently verifies and timestamps transactions across peer networks, data tampering is extremely difficult once data is recorded on the ledger. Ultimately, 3PL providers and others using cloud-based WMS can use blockchain to further safeguard private business and client information and build client trust.
- Sustainability and efficiency: Last but not least, cloud WMS contributes to more sustainable logistics practices. Thanks to its optimized resource utilization, lack of a need for on-premise IT infrastructure, and smarter workflows, cloud WMS lowers energy consumption, reduces waste, and promotes eco-friendly operations. Ultimately, this helps companies align with the growing demand for environmental, social, and governance (ESG) compliance as well as greener supply chains.
Adopt a leading WMS for ecommerce fulfillment today
Cloud-based 3PL WMS offers many advantages that traditional on-premises systems don’t provide. Besides increased scalability and flexibility, third-party logistics cloud solutions provide real-time data access, lower upfront costs, streamlined integration capabilities, and robust security measures — features that 3PL providers need to optimize operations and remain competitive.
If you’re looking for a reliable cloud-based fulfillment solution to stay on top of logistics software trends, Logiwa is here to help. Our AI-powered real-time warehouse management system can help 3PL, DTC, and B2B operations grow, elevating digital warehousing to new heights. Request a demo today to see how we can help you.
