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An Overview of 3PL Inventory Management Solutions

3PL Inventory Management

An Overview of 3PL Inventory Management Solutions

A Breakdown and Comparison 

In every behind-the-scenes business or operation, such as supply chain management, shipping, and handling, it can be hard to understand what is going on day after day in your own company. It can be particularly complicated if you’ve allowed it to run for some time without checking in on your system or if you are considering a significant change in software providers. 

Before we dive into what 3PL  inventory management is and what the solutions may be for your needs, let’s take a look at the underlying structure that all inventory management solutions rest on in the first place. The two most common names in the industry for these processes are logistics and supply chain management and they are used interchangeably to refer to the same processes. What is the difference, if any?

Put simply, the difference between logistics and supply chain management is that logistics generally refers to the movement of objects, processes, and other such things through the supply chain management solution. Another way to think about it is that the supply chain is the structure through which logistics moves the needed items and processes.  

Let’s take a look at how logistics work in and with a supply chain and what types are currently used by companies across the world. 

How logistics work in a supply chain 

Logistic basics

In any warehouse, people have to make sure that things get from point A to point B in a timely and efficient manner. This may happen using automated software, software and team members working together, or by manual labor. Today, most companies use a combination of all three, depending on their needs. Regardless, the term “logistics” covers every one of those processes, from the time the first shipment is ordered for the warehouse to the last delivery to the customer. 

In today’s competitive environment, many mid-level companies and almost all large-scale corporations must do this on a global level. This includes different time zones, currencies and exchange rates, local cultures, communication styles, shipping and handling, and much more. But as the old saying goes “time and tide wait for no man” and all warehouse teams know this very well.

That is why different types of logistical options exist to meet your needs. From doing it all within your own company to outsourcing almost everything, there are companies and softwares to help you. And the best companies are taking advantage of them every day.  

What are the types of logistics currently in use?

There are five different types of logistic methods that are fairly well known. Four are commonly used. They are 1PL, 2PL, 3PL, 4PL and 5PL systems, with the 5PL system being the one that is not commonly used. In each case, the “PL” stands for logistic provider and the number stands for the number of the parties involved. For example:

  • First-party logistic providers (1PL)  send a product directly from the producer to the seller. An example in this case may be a lettuce farmer sending lettuce straight to the grocery store.
  • Second-party logistic providers (2PL) send a product to a carrier, who then sends it to the warehouse. In this case, the lettuce farmer would pack a truck full of lettuce, which would then transport it to the store.
  • Third-party logistic providers (3PL) are slightly more complicated. In this case, a third party of some sort comes between the farmer and the store, like a vegetable packing and shipping company.
  • Fourth-party logistic providers (4PL) are very similar to 3PLs, with the exception that a specialized logistic company manages a 3PL on the producer’s behalf. The farmer has now hired at least one and perhaps two companies to manage his crop for him.
  • Finally, a fifth-party logistic provider (5PL) is a logistics company that manages every aspect of the process from the production of the product to the final selling of said product to the consumers. 

Now that we have an overview of all the inventory management solutions that are available, we can see some of the benefits and drawbacks that each system offers your warehouse management needs. In general, third-party logistic providers hit the sweet spot between helping out both the producer and the customer while still providing the producer some level of control over the entire process.    

On a global scale, that professional assistance can be invaluable at any size of company. For mid-level companies looking to increase their production and profits, a 3PL inventory management solution may be the answer you have been looking for to meet your needs. Let’s move into a deeper dive on 3PL inventory systems and how they can help you. 

The role of third-party logistics providers

Regardless of your company’s unique needs, the role of a third-party logistics provider doesn’t actually change that much. It can be classified under general professions, such as marketing, manufacturing, and other cross-industry businesses and companies. The subject changes, but the principles do not. 

3PL inventory management solutions bring specialized, professional help to your warehouse operations. These professionals and software systems can integrate packing and shipping on a scale that mid-level companies simply cannot accomplish by themselves. Extra warehouses, trucks, train cars, and more could in theory be rented through a third-party logistics provider, depending on your needs. They may also handle some of the actual work themselves, freeing up your team to do other things. 

3PL software solutions can handle such things as coordinating billing, currencies, and other accounting logistics. On the warehouse floor, these software systems can come alongside your teams to manage, rotate, store, and organize your warehouses at a far more efficient level than a purely manual team can ever reach. 

So, how do logistic companies actually work? 

How do logistics companies operate?

Basically, logistic companies operate either alongside or inside the company who hires them in order to manage the flow of the business throughout the company’s supply chain. Software solutions and/or providers work the same way. The level of involvement that each company can or will have will vary depending on the overall needs of both companies. 


Because each company operates differently, challenges will arise even in the very best scenarios. Integrating together may not always be an option, even though it generally makes the most sense given how closely you will have to work together. However, some simple tips on managing third-party logistics still apply. Let’s lay out the basics.

How do you manage third-party logistics?

The key word to remember when you consider how to manage third party logistics is communication. Communication will be key throughout the entire process, whether it’s with an actual company or with the company that runs your software. 

Some other things to remember in managing third-party logistic companies include:

  • Differences in cultures and systems 
  • Differences in time zones and expectations of availability during non-traditional hours
  • Local and remote teams for both companies and their expectations
  • And more

In the case of third-party logistics software, the rules shift, given that you will be primarily working with new software systems. Whether those are internal or external, keep in mind that:

  • There will be a learning curve and it can be steep
  • Software can’t do everything on its own--yet. 
  • Your team has to buy into the new solutions in order to reap their full potential. 

3PL Inventory Management

3PL Warehouse Management Systems

Now that we have an overview of 3PL systems and how they work, it’s time to look at the options that are available to you. A lot of different management systems exist, but for the purposes of this article, we have chosen to focus on 3PL warehouse management software options that are available to the general public. 

Who are the most trusted 3PL warehouse management software brands?

Most people have strong opinions about the tools that they use and 3PL warehouse management software is no different. After a careful survey of the various options available and the reviews of these brands, the frontrunners are: (in no particular order)

  • TradeGecko
  • Infor Supply Chain
  • Fishbowl
  • Mobe3 WMS
  • Zebra Warehouse
  • Manhattan WMS
  • 3PL Warehouse Management
  • Magaya

Keep in mind that these are some of the most commonly used and trusted systems. This does not necessarily mean that they are the best for your needs. In general, you should contact the different 3pl warehouse management system providers and open up a discussion to learn more. 

How does Magaya's 3PL software suite compare to top brands?

A comparison of 3PL software suites is always a difficult task. Each one will have advantages and drawbacks. Some of these can’t be found until you have actually used and (in some cases) committed to the software. 

The sheer flexibility of our 3PL software enables you to go farther and faster than some of the current front-runners. 

What we bring to the table is a powerful WMS and distribution core combined with cross-border logistics functionality 

  • eCommerce connectivity with major online sales sales channels as well as couriers, out of the box
  • Easy to use and intuitive
  • Customer support over the phone by friendly specialists working at Magaya, not a call center
  • One single system for operations, accounting, visibility and tracking, connectivity and compliance

You get access to these and many more features:

  • Inventory Management by Part Numbers or Serial Numbers
  • Advanced Warehouse Management with:
    • Inventory Counts
    • Pick-Pack-Ship operations
    • WMS Mobile handheld devices
  • eCommerce Order Fulfillment
  • Automated Dimensioning, Weighing and Photographing cargo
  • Customs compliance and documentation
  • Inventory Management by Part Numbers or Serial Numbers
  • eCommerce Order Fulfillment
  • Sales Orders
  • eCommerce connections
  • Purchase Order Management
  • Automated Replenishment

In Conclusion

3PL inventory management solutions span across companies, industries, and the globe on a scale that is unprecedented in the history of the world. While the basics remain the same, the functions and details of these solutions should be flexible and open to change. This is especially true for software solutions.

In order to find the best solution for your inventory management and supply chain needs, you will have to take a deeper dive into the various sorts of software to see what will work for you, looking always into how you can optimize your operations, and create the foundation for a flexible service offering. 

And that’s where Magaya’s free demo can help you discover what you need most from your 3PL inventory management solution. 

Schedule a demonstration today and see where your business can go in the future. 

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