Five Time-Tested Tactics for Increasing Your 3PL Warehouse’s Profitability

Today’s 3PL warehousing world is brimming with unprecedented opportunities.

From the skyrocketing growth of e-Commerce to the increases in drop-shipping, B2C fulfillment and more, the entire logistics industry is poised for exponential growth.

In order to seize these opportunities, however, most 3PL warehouses know they must upgrade many areas of their operations. 

Their challenge is to make all of the changes that will be required – without impacting their present levels of profitability or impacting the productivity of their current operations.

Fortunately, there are a number of proven strategies 3PLs and warehouses can employ that will not only position them to grab these new opportunities – but actually enable them to increase their profitability.

To optimize your logistics operations, here are a few techniques that can help you optimize your people, processes, and assets:

1. Analyze Your Profitability by Account – In order to understand where you can improve your profitability, your 3PL must first understand where it is making money – and where it is losing it. You can do this by performing a detailed analysis of every customer account.

Best practices show that performing this analysis for every customer on a monthly basis can prevent profit leaks and help you begin pricing adjustment discussions in a timely manner.

2. Evaluate Your Staffing – Your employees’ have an enormous impact on your overall profitability. Measuring productivity and profitability is a complex analysis. Employers must assess the performance of everyone on your payroll, and evaluate their investment in training and educational efforts to grow their teams.

Remember, employee performance affects your profitability every single minute of every single day. Even small changes in behavior and attitude can yield enormous results over the long run.

3. Question Your Processes – The small, routine, and highly repetitious tasks that power your warehouse often offer tremendous opportunities for cost-savings. Any improvement, optimization or reduction in effort will be repeated over and over again throughout the work, can quickly add up to have a huge positive effect on your bottom line.

Every process should be scrutinized and tested to see where it could be improved. Once you have reviewed each process individually, analyze your warehouse operations as a whole.

4. Assess Your Physical Assets – Warehouse space, equipment, and other physical items are often overlooked when conducting a review of your business. And, while it may appear that holding on to existing assets saves you money, a closer analysis could reveal it actually costs you a lot more – both today and in the future.

If you’re trying to squeeze one more year out of an older piece of equipment you might actually be spending more on maintenance or lost productivity than it would cost to upgrade the item.

Worse still, the perception that your operation isn’t state of the art can leave your current or prospective customers with a negative impression of your level of technological sophistication. A thorough assessment should surface these issues.

5. Upgrade Your Technology – Simply put, technology offers the fastest, easiest to implement, and most reliable avenue for increasing one’s profits. For 3PL warehouses, this revolves around their choice of Warehouse Management System (WMS).

In addition to providing 24/7 visibility and seamless integration, today’s WMS serves as your technological command and control center. 

Choosing the right WMS for your business and customer needs will increase revenue by streamlining processes and delivering reliable results. 

For example, a cloud-based (SaaS) system will become increasingly important as such technologies like automated packing and shipping, autonomous vehicles and the Internet of Things become commonplace throughout the logistics industry.

These technologies offer immense opportunities to increase your 3PL warehouse’s profitability.  Having the proper WMS in place to manage your business will be crucial to getting the results you desire.