Navigating Billing Automation to Improve 3PL Profitability
Date: February 11,2021
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Even with last year's dramatic ecommerce growth that drove numerous opportunities for third-party logistics (3PL) warehouses, many 3PLs still struggle to find new ways to improve the profitability of their business. In discussions with customers, the effectiveness of a 3PL’s billing processes can make a significant difference in overall customer and company profitability.
I recently spoke with Nick Luni, Director of Sales & Marketing at Allstate Moving Systems, to get insight into how their business was able to capture $15,000 in additional revenue by automating billing processes for several warehouses. Like many warehouse managers of high-growth 3PLs, Allstate Moving Systems used Excel to track multiple customer activities and billing requirements at different warehouses—a tedious and error-prone process that quickly became intractable as operations grew and additional customers were onboarded. There were three specific challenges that Nick needed to navigate to scale operations: lack of inventory visibility, the need to automate transactional charge capture for non-billing savvy staff, and the requirement for automated recurring storage charge capture. To learn more about Allstate Moving Systems’ challenges, watch our recorded interview here.
Step 1: Integrating Barcode Scanning With a WMS
The first thing that Nick did to organize, track, and view inventory and billing more systematically and in real-time was to tag every inventory item in the warehouse with an RFID barcode. Barcodes and barcode scanning are important because they empower staff to scan inventory and capture charges in the moment when service is rendered rather than manually entering charges in Excel, which risks typos and lost documentation of the services.
Barcode scanning is only half of the equation. The other half of Nick’s solution was adopting a warehouse management system (WMS), 3PL Warehouse Manager, to automatically take item data from barcode scans and calculate specific transactional charges for customers in the system without having to place the burden of billing capture on his employees. Consider the game-changing productivity boost your staff could experience without having to worry about manual data entry.
Step 2: Scaling Operations with the Same Headcount
After Nick automated transactional billing capture, the warehouse’s revenue grew significantly —primarily driven by productivity gains and time savings from automated billing and staff’s added capability to capture transactional charge on the fly with barcode scanning.
“Our distribution business grew from 38% of total revenue to 50% of revenue with the same staff...and it doesn’t feel as chaotic,” Nick Luni, Allstate Moving Systems.
Imagine the growth and time savings your warehouse can gain by automating billing capture. Transactional charges are not the only types of revenue warehouses need to track.
Step 3: Capturing Recurring Storage Revenue
Recurring storage charges are important too, and not tracking them can result in significant lost revenue for 3PL warehouse managers and owners. Don’t take my word for it. We surveyed over 100 3PLs during a billing webinar in 2020 and discovered that 82% of warehouses thought they were losing money as a result of uncaptured monthly shipping, receiving, and recurring storage charges. Nick discovered one item in inventory that he wasn’t billing recurring storage for was worth $15,000 in additional revenue. Sometimes revenue sources can be hidden by manual processes, but billing automation and real-time inventory visibility can bring these uncaptured charges to light enabling your firm to realize its full revenue potential.
Nathan is an experienced SaaS product marketing manager who is passionate about creating compelling product messaging. Working closely with product, marketing, and sales teams, he is responsible for crafting effective product strategies and content to share the benefits and features of 3PL Central's solutions for third-party logistics warehouses. Previously, he has shared technology solutions with state DOTs such as the New Jersey Turnpike Authority and wireless solutions for warehouse AGV manufacturers.