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The Ultimate Guide to 3PL Inventory Management

Is your business growing too quickly? While your business growing fast might seem like a good thing, you could be left with burnt-out employees, frustrated supply chain partners, and disgruntled customers.

To avoid these problems, you need a solution that works. 3PL inventory management can help you meet your growth expectations.

Third-party warehouses entail a lot of different services. Keep reading to learn more.

What Is 3PL Inventory Management?

Inventory can sit in a warehouse and keep your company’s cash tied up. Businesses need to fulfill product demand without overstocking warehouses.

3PL inventory management helps you identify what products you need to order and when. They can monitor the inventory you order from when they are purchased to when they are sold to customers.

3PL software can also help with digital inventory management systems so that you can keep an eye on inventory levels as well.

How Do 3PL Inventory Management Solutions Work?

A 3PL inventory management system involves integrated software solutions designed to manage operations, including:

  • Inventory control
  • Order fulfillment
  • Shipment
  • Invoicing
  • Reporting

The software is data functional by providing your business with the analytics tools you need to optimize operations and improve your customer service.

Let’s dive deeper into the key functions of inventory management systems:

Inventory Control

A 3PL software solution will include data on stock levels, goods tracking, and reordering capabilities. These features ensure that your products are efficiently distributed.

Because your stock levels remain in a good place, you won’t be overstocking which will save you money.

Order Fulfillment

manual order fulfillment process is almost unheard of these days. If you can afford 3PL warehouse management and software, say goodbye to manual operations.

A 3PL system automates the order fulfillment process from beginning to end. It includes functionalities like automated packing and barcode scanning as well.


For businesses, the most important step in warehouse management might be reporting. A 3PL system provides real-time insights into your inventory performance so that you can identify and address issues.

Customer service levels, delivery time, and product availability are just some of the things you can track.


If you already use accounting, ERP, or e-commerce software solutions, a 3PL warehouse management system can integrate into them. This eliminates the need for manual entry and makes it easy to continue using other software programs.

With an integrated system, you’ll improve how accurate your data is across the board.

3PL Inventory Management Best Practices

Managing inventory should not be a lackadaisical process. If you choose 3PL inventory management services, it’s important to follow best practices for operational efficiency. Best practices include:

  • Automated replenishment
  • Accurate forecasting
  • Effective warehouse layout
  • Real-time inventory tracking

Automated replenishment can help with optimal inventory levels to minimize the risk of excess inventory and stockouts. Accurate forecasting also helps with inventory levels by reducing holding costs and improving order fulfillment.

Don’t underestimate the effects of an efficient warehouse layout either. A great layout improves overall warehouse operations by reducing handling time and picking efficiency.

Real-time inventory tracking uses barcode scanning to ensure optimal inventory turnover by preventing stockouts and overstock situations.

Benefits of a 3PL Warehouse

Business management is a time-consuming process so don’t add the stress of inventory management to your to-do list as well. 3PLs can take on the responsibilities of cycle counts, inventory reporting, labeling, and more.

In addition to these services, there are major benefits you can experience when you work with a 3PL warehouse:

Speed and Accuracy

Consumers demand speed and accuracy from the businesses they buy from. Hiring a 3PL warehouse that specializes in these processes can help a growing business that doesn’t have the infrastructure needed to take on these operations.

This type of warehouse will use 3PL software and technology to manage inventory, automate routine tasks, and provide your business with visibility into the process. All of these things drive value and efficiency.

Regulatory Navigation

Another reason to hire third-party warehouses is for regulatory navigation. If your business products are controlled by various rules and regulations, your warehousing needs to accommodate them.

For example, some products that have regulations regarding storage are:

Without the right accommodations, the inventory and your business will be in jeopardy.

Industry Expertise

A 3PL will offer an array of expertise because of their years of industry experience. They can combine several warehousing services under one roof.

A great 3PL service will be able to:

  • Negotiate lower shipping rates
  • Manage materials
  • Increase picking and packing efficiency

Although these are things you might think you can do on your own, it is more cost-effective to hire 3PL services. You save even more money if you outsource your 3PL warehousing to China.

B2B and B2C Management

A 3PL system should be able to manage B2B and B2C products through multi-channel distribution.

With a system like this in place, you won’t face duplicates of inventory that could throw your supply and counting cycle off track.

Not only will this save your business money, but you can lower your warehouse footprint. The days of needing to account for inventory surprises will be over.

Custom Solutions

A great 3PL warehouse recognizes that all businesses are different and require custom solutions to succeed. When you choose a 3PL service, make sure they provide all of the services you need.

Your agreement could combine cross docking, dryage, transportation, warehousing, etc.

An integrated and customizable approach enables your warehouse to pull any strings necessary to efficiently move your products to the right location.

Is 3PL Inventory Management Right for Your Business?

3PL inventory management is a great option for growing businesses that want to prevent overstocking and low inventory levels.

Choosing a reputable and experienced 3PL warehouse in China is essential to the success of third-party involvement.

Our British-owned and managed company, Shield Works, offers a wide range of services, including 3PL inventory management in China. With 19 years of China-based manufacturing experience, we’re equipped to help businesses like yours.

Contact the pros at Shield Works today to get started.