Inventory Management with a 3PL: Best Practices

As one of the largest expenses for any e-commerce business, inventory plays a key role in selling products online. Successfully managing inventory is crucial to the longevity of your business. But how can you manage inventory when it’s not in your hands?

You may think that by outsourcing order fulfillment to a third-party logistics (3PL) provider, you are completely turning inventory management over to them. Here at ShipBob, we believe the opposite: A good 3PL partner empowers merchants to manage their inventory with the right tools and guidance.

Inventory management involves much more than just warehousing your products. Let’s take a look at how the right 3PL can help you manage your inventory better than if you were fulfilling orders in-house.

How to own inventory management when outsourcing fulfillment

Learn how you can manage your inventory down to the SKU level with a 3PL and why working with a fulfillment partner can even make inventory forecasting easier.

1. Sync inventory from your store

A tech-based 3PL offers software that seamlessly integrates with all major e-commerce platforms and marketplaces. This enables merchants to connect their store in just a few clicks without requiring a developer to set up an integration.

Connecting multiple data sources provides a cohesive view of orders, inventory, fulfillment centers, sales channels, and customers all in one place. Once your products are listed on your online store, you can make sure all of your SKUs are pulled in for your 3PL.

Then, you can sync it again as you add new products without duplicating effort.

2. View real-time inventory counts

Once the 3PL has your inventory in their warehouse, you can always check the quantity on hand and units sold per day. This gives you reassurance and visibility into what is available to ship to your customers.

You may even be able to push actual stock counts back to your store’s website, so your customers know if items are ever out-of-stock.

3. Proactively reorder inventory

In addition to gaining visibility into current inventory levels at each fulfillment center, you can also make better inventory-related decisions in the future.

Tech-based fulfillment uses historical data to help project when you should reorder inventory to prevent stockouts and back orders. You can set reorder notification points for the quantity at which you wish to be alerted to restock.

This helps you connect the upstream activities of purchasing and manufacturing to the downstream activities of sales and product demand, to ultimately make more accurate purchasing and production decisions.

4. Store inventory in strategic locations

Your 3PL should be able to help you determine your optimal fulfillment center locations based on your customers’ addresses.

Your customers most likely don’t all reside in one geographic area. Using one fulfillment center can make it difficult to efficiently reach the majority of people who buy from you. Instead, distributing your inventory to major hubs or cities can ensure your orders are delivered quicker and at less cost by traveling less distance.

Each time an order is placed, it will automatically choose the fulfillment center closest to your customer to draw inventory and ship the order. Additionally, if you run out of inventory at one fulfillment center, you have a backup.

[Related article: When Should You Split Inventory Across Multiple Fulfillment Centers?]

5. Discover trends to drive growth

Having accurate insights about your customers’ purchasing trends can help you figure out the optimal inventory levels for your products.

For example, understanding which products aren’t selling but instead costing you more money sitting in a warehouse, as well as those that are selling out and losing you sales, can empower you to make better supply chain decisions.

Many 3PLs provide built-in reports that let you view a trend analysis of your products and give you more control over the key metrics that drive business growth. These include peak fulfillment times, revenue of orders shipped by day, sales by channel, and sales and quantity of orders by USPS zone.

6. Control how products are grouped

Using the 3PL’s technology, you have the power to decide and make changes to how you group your inventory. This includes:

  • Bundling your products for promotions
  • Merging the same product across e-commerce platforms
  • Separating inventory by lot numbers and expiration dates to comply with regulations and be able to act promptly and effectively in the event of a recall
  • Kitting items to assemble them a certain way before they are shipped to customers
  • Preparing orders to send in bulk or transfer inventory

Conclusion: 3PL inventory management requires real-time tech

In today’s world, the traditional 3PL is no longer enough. There are many benefits of working with a modern, tech-first 3PL, including the ability to easily manage inventory.

Online merchants that wish to stay competitive need a fulfillment solution that will help them prevent stockouts and accurately forecast demand to increase sales and reduce warehousing costs.

If you’re in need of a 3PL that will help you manage your inventory in real-time, check out ShipBob. With ShipBob’s technology and network of fulfillment centers in the largest US cities, you can easily connect your disparate systems to gain a holistic view of your e-commerce operation.

Learn more

Learn more about how partnering with a modern fulfillment company can help you manage your inventory, and get tips for choosing a fulfillment partner. Download “How to Choose a 3PL for Your E-Commerce Business.”

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