3PL for Distributed Inventory

Why Should a Business Hire a 3PL for Distributed Inventory?

Every business aims to expand its business and target a larger customer base. However, not all businesses can afford to invest in their logistical infrastructure at different locations. But does expanding your reach mean stretching your resources thin? Absolutely not. A 3PL for distributed inventory is your ultimate scalable solution to store and fulfill orders from strategically located warehouses.

With a reliable 3PL, you gain access to a well-established fulfillment network that takes the complexity out of managing inventory.  Instead of handling logistics on your own, you can benefit from the expertise of a 3PL inventory management system. Here are some of the advantages of partnering with an external logistics services provider;

Cutting Down Shipping Cost

No business has its customer base concentrated in a certain geographic area. Thus, shipping orders through one warehouse leads to high shipping costs as the orders will have to cover longer distances. With a 3PL for distributed inventory, you can store your inventory closer to your customers in different strategically located warehouses.

Through a distributed inventory management system, your orders will be fulfilled from the warehouse closest to the shipping destination. Hence, the shorter routes will cost less as delivering a package across 100 miles is far cheaper than shipping to over 3000 miles. Moreover, lower shipping costs will also reduce the onset of cart abandonment, and your sales will increase.

Flat-rate Fulfillment

3PLs that offer distribution fulfillment often offer flat-rate fulfillment instead of charging on a per-order fulfillment cost basis. They offer a constant all-in-one pricing for all the orders regardless of the shipping distance they will have to travel. They are able to do so by fulfilling the orders from the fulfillment center that best suits their operations, balancing the costs and operational efficiency. A known fulfillment cost allows businesses to manage their budgets effectively and allocate their resources strategically.

Faster Order Shipping

Distribution inventory management enables you to offer the perk of same-day shipping service to your customers, as the orders will be shipped from the closest warehouses. Moreover, with distributed inventory, more addresses of the same location will be covered on the same day as your inventory is already near. Ultimately, your sales will increase as your customers are getting quicker deliveries without it burning a hole in their pockets.

Extensive Geographic Coverage

Access to multi-location warehouses not only expedites local deliveries but also allows businesses to efficiently cater to their international customers. By storing your inventory in the offshore fulfillment centers of your supplier, you can avoid the complexities of cross-border orders. With a 3PL for distributed inventory, you can target the global market without customs concerns and increased costs. This approach allows international customers to receive their orders domestically and faster.

Load Balancing

Another advantage of distributed 3PL inventory management is that it analyzes buying patterns of different locations and allocates more inventory to the regions with higher sales demand. This strategic 3PL inventory control allows them to keep up with your sales velocity instead of having you invest in more inventory for every warehouse. Furthermore, if the closest warehouse runs out of stock, the 3PL seamlessly fulfills the order from another location so that your sales never stop.

How to Find an Ideal 3PL for Distributed Inventory?

Since you are outsourcing your logistics, it only makes sense to partner with an expert 3PL that specializes in inventory distribution. Logistics is a critical component of any business, directly impacting efficiency, costs, and customer satisfaction. That’s why choosing the right logistics partner is a decision that requires careful consideration.

Here are the key steps you should take when finding a supplier for 3rd party inventory service;

Shortlist 3PLs

In the 3PL world, inventory distribution is an operation that all suppliers perform to optimize their operations across different warehouses. At the 3PL’s end, this distribution is driven by storage capacity, workforce size, and order volume of a certain location. Only a few 3PLs offer inventory distribution as a service where business gets to choose which warehouses to use within the same 3PL network and how much inventory to store in each. The first step towards finding an ideal partner is shortlisting the 3PLs that offer distributed warehouse inventory service.

Evaluate Geographic Coverage

Once you have narrowed down the potential suppliers, you need to evaluate their geographic coverage based on two factors. First, ensure their fulfillment centers are close to your key distribution areas; otherwise, despite distributing inventory, orders will still be shipped from distant locations.

Second, evaluate whether their warehouse network is strategically positioned to cover the majority of your target market efficiently. Furthermore, their warehouses must have direct access to major road networks so that your shipping remains uninterrupted under all circumstances.

Verify Expertise

Your distributed inventory management 3PL must also have the necessary expertise required for managing multi-warehouse fulfillment. You can only reap the benefits of vendor distributed inventory if your supplier is well-versed in its requirements and complexities. Otherwise, instead of your operations becoming more efficient, your business can suffer from loss.

Analyze Inventory Management System

The efficiency of inventory management is what makes the difference between under-the-par fulfillment and excellent fulfillment. The proficiency of the 3PL inventory system becomes more paramount when it comes to distributed inventory as it is more complex than centralized inventory.

Even if your inventory will be managed under different warehouses, it must be synchronized at a single, centralized IMS. Moreover, the IMS of your 3PL must have the capabilities to track your sales across all warehouses and provide demand forecasting for stock replenishment.

Check for Integrational Capabilities

Your 3PL for distributed inventory must have advanced technology and integration capabilities to streamline the workflow. With distributed inventory, storage of inventory in different warehouses will not do you any good until those warehouses are integrated with your sales channels. Thus, the 3PL warehouse inventory management system you choose for your business must have best-in-class technology to synchronize every operation.

Things a 3PL for Distributed Inventory Must Do When Shipping

Distributing inventory across multiple locations is only half the equation for a successful business. The real challenge lies in how effectively your 3PL handles shipping. A reliable 3PL must ensure that orders are not only fulfilled expertly but also shipped efficiently. If shipments aren’t managed strategically, the whole purpose of inventory distribution falls apart.

The following are the things your 3PL must consider before shipping your orders;

Order Routing

Once a customer places an order through your sales channel, the 3PL must route it to be fulfilled from the nearest warehouse. Proper order routing minimizes shipping costs and speeds up delivery times. If orders are assigned to the warehouse randomly without considering proximity, the entire purpose of the distributed inventory is defeated. Thus, a 3PL must have an intelligent routing system that selects the optimal fulfillment center based on location and inventory levels.

Carrier Selection

Once your orders are handed over to the shipping carrier, their handling and delivery are no longer within your control. Then, even if the orders are shipped from the nearest warehouse, any issues on the carrier’s end can still cause delays. This means you might not fully benefit from distributed inventory. To avoid this, ensure your 3PL partners with reliable shipping carriers to maintain fast and consistent deliveries.

Labeling

Labeling doesn’t just guide the carrier; it also informs customers about the origin of their order. This detail simplifies the return process for the customers if a return becomes necessary. Your 3PL should avoid using generic labels. Instead, each order should have a warehouse-specific label so that returns are directed back to the correct fulfillment center.

Distributed Inventory Versus Multi-Warehousing

While both distributed inventory and multi-warehousing involve storing goods in multiple locations, the key difference lies in control and decision-making. Distributed inventory is a strategy where inventory is strategically placed across multiple fulfillment centers. While multi-warehousing focuses on managing multiple warehouses, often under the same 3PL network, where the brand retains more control over inventory placement.

In distributed inventory, a 3PL also intervenes in inventory allocation using their expertise to ultimately enhance the functioning and accelerate order fulfillment. Whereas, in multi-warehousing, it is solely up to the business to decide which warehouses it wants to use.

Choosing SHIPHYPE as Your 3PL for Distributed Inventory

SHIPHYPE offers a comprehensive fulfillment solution that covers all the services along with distributed inventory. We have years of experience managing the supply chains of companies at different warehouses. We have curated different strategies to accommodate the requirements of every business and align our services with them. We manage the distributed inventory like no other and make sure that you get the maximum benefit from it.

Hub and Spoke Model

Unlike traditional 3PLs, where all warehouses operate independently, our inventory fulfillment solution allows you to implement a hub-and-spoke model. Through this approach, you can centralize bulk inventory at a primary warehouse located in your key distribution area. This hub will then strategically distribute stock to the other warehouses depending on the demand and order density. This model will ensure your primary distribution center is never out of stock.

Diverse Inventory Management

SHIPHYPE does not follow a basic, conventional inventory management strategy. We understand that your inventory is your significant financial resource. Therefore, we use the management approach you want us to follow for your inventory. Whether you want us to follow the just-in-time inventory management technique or the first-in-first-out principle, we will do it for you.

Too confused to decide which technique is best for your inventory? Worry not, we will decide the best inventory management technique for your products based on the requirements of your business. For instance, for businesses dealing in perishable items, FIFO is the best principle. While for businesses with slow-moving inventory, JIT or EOQ is the suitable technique so that there is no excess stock.

Cohesive Coordination

We maintain standardized and coherent services across all of our fulfillment centers. Any changes or updates you request will be implemented uniformly across our entire logistics network. You will not have to individually deal with every warehouse. To streamline communication, we assign you a dedicated account representative who serves as your single point of contact for all modifications and inquiries.

Additionally, our distribution network is fully optimized and interconnected. If any issues arise at one facility, another fulfillment center steps in to handle orders and ensure uninterrupted operations.

Flexible Fulfillment

As a third party logistics inventory management service, we tailor our fulfillment strategies to meet the unique needs of your business. We give you the flexibility to choose the services you require and define how you want your orders to be handled.

Beyond just execution, we bring industry expertise to the table, offering recommendations to optimize your fulfillment process. Whether it’s inventory allocation or shipping methods, we help you implement the most efficient solutions. With our adaptable approach, you stay in control while benefiting from our logistics expertise.