Ecommerce companies of all sizes – from small start-ups to Fortune 500 enterprises – rely on third-party logistics (3PL) warehousing and distribution providers to handle their inventory management and order fulfillment. These partners are supposed to help companies navigate today’s business landscape, boost their efficiency and on-time delivery performance, and streamline their supply chain operations—but, in many cases, they don’t.
Many ecommerce players find that working with third-party logistics warehousing partners can actually lead to increased supply chain complexity and costs. One of the primary reasons for this phenomenon is that companies engage numerous 3PL warehousing and distribution service providers at the same time, which can create issues, particularly when it comes to inventory management.
When you outsource your warehousing and distribution services to multiple 3PLs, you manage multiple inventory pools across multiple sales channels, which can become a major source of irritation and inefficiency for your organization. That’s why it’s often best to engage a single 3PL warehousing provider that has the resources and reach to handle your warehousing and distribution services, across all sales channels, with a single pool of inventory. Consolidation in warehousing can make a huge difference for your operations.
Amazon Supply Chain Services (ASCS), a 3PL and suite of complete end-to-end supply chain support, is one such provider. ASCS provides access to Amazon’s global fulfillment network, cutting-edge technology, and superior delivery performance through its Multichannel Fulfillment (MCF) service. MCF offers ecommerce businesses increased visibility and reduced complexity by consolidating inventory into a single pool that can be used across multiple channels.
Let’s explore the key benefits to consolidation in warehousing, and how working with a 3PL warehousing and distribution provider to consolidate your inventory into a single pool can streamline your operations.
Key Benefit #1: reduced costs for fulfillment and storage
One of the strongest benefits of pooling your inventory with a single provider is that it can help you cut supply chain costs, a critical business objective for most ecommerce businesses.
When companies pursue consolidation in warehousing with a single warehousing and distribution provider, they typically see cost reductions in two areas:
- Fulfillment costs: By pooling your inventory with one 3PL warehousing and distribution provider, you can leverage economies of scale to drive down your actual costs of fulfillment. Simply put: as the volume of your orders increases, the price that you pay for fulfillment tends to decrease. There are two reasons for this:
- By placing all your inventory with a single 3PL provider, you can position yourself to negotiate better contracts with lower fulfillment costs.
- Many 3PLs give discounts for high-volume orders. For example, ASCS’ MCF offers up to 50% discounts for multi-unit orders.
Storage costs: Most 3PL warehousing providers charge for inventory storage, so the longer your stock sits in a 3PL’s fulfillment center or warehouse, the more your storage fees will add up. By consolidating your inventory with a single 3PL, you can expose that one pool of inventory to multiple sales channels, thereby increasing the chance that it will be sold and decreasing the amount of inventory you have in the warehouse (and your 3PL warehousing costs overall). Also, by selling and utilizing your stock, you can avoid the additional costs involved in collecting excess or stranded inventory from your 3PL warehousing provider and shipping it back to your facilities (unless, of course, you just want to write it off).
With MCF you can consolidate your inventory into one global pool to fulfill orders through Amazon.com (through Fulfillment by Amazon, an ASCS service dedicated to fulfilling orders sold on Amazon.com) or other sales channels like ecommerce marketplaces or social media platforms. This multichannel exposure and access to Amazon’s fulfillment network ensures that you will be able to store less inventory overall, and ship it faster and more efficiently by strategically placing inventory close to your customer base and positioning you well to expand into new areas when you’re ready to scale.
Key benefit #2: improved operational efficiency
Besides being a source of increased operating costs, distributing your inventory among numerous 3PL warehousing and distribution partners can also add complexity across your logistics operations. Managing relationships with multiple providers, each with their own operating procedure for inbounding shipments of your inventory, invoicing and billing, and other processes, can be time-consuming and labor-intensive.
By pursuing consolidation in warehousing with a single 3PL, you can minimize the amount and time and effort you spend managing your 3PL workflows, consolidate the inbound stock shipments you send to your 3PL’s fulfillment centers, and drive improved operational efficiency across your organization.
With a 3PL warehousing and distribution partner like ASCS, you’ll also have access to additional supply chain services like ground freight and global logistics as you scale. You can add these services as you need them, which enables you to stay ahead of customer expectations, manage a complex process with greater ease, and boost your capacity without adding additional logistics vendors and complexity to the process.
Key benefit #3: increased opportunity for business growth
Another key benefit of consolidating your inventory with a single 3PL warehousing and distribution provider is that it can open up opportunities for your business to reach new audiences, scale, and grow with ease.
If you partner with a third-party logistics warehousing business like ASCS, you gain access to Amazon’s global network of fulfillment centers, cutting-edge technology, and logistics resources. With this support, you can:
- Strategically distribute and position your inventory around the world so it’s close to where your customers are—and within reach of new customers.
- Gain greater visibility over inventory across your end-to-end supply chain (as it’s gathered together in a common inventory pool).
- Make data-driven decisions on how to best utilize your global inventory pool to satisfy customer demand across different markets and sales channels.
- Eliminate the need to constantly search for new supply chain providers in various locations around the world as your business grows. With ASCS as your provider, you can easily add on additional service support as you grow, simplifying a normally time-consuming step of expansion.
If you consolidate your inventory with a 3PL warehousing provider that has a global presence like ASCS, you can set your business up to succeed today and scale in the future.
Key benefit #4: simplifying warehouse consolidation lets you scale
Navigating today’s complex business world is challenging, and most ecommerce companies are continuously looking for ways to simplify and strengthen their supply chain. Pooling your company’s inventory with a single third-party logistics warehousing provider can help. By achieving consolidation in warehousing with one 3PL, you can streamline your end-to-end logistics operations, cut fulfillment and storage costs, boost efficiency, and unlock opportunities for growth and expansion.
If you choose a pooled inventory strategy remember that it’s critical that you partner with a 3PL warehousing and distribution provider, like ASCS, that has the operational excellence and global logistics network you need to support your long-term business growth around the world and across all sales channels.
