Microsoft offers comprehensive solutions that can unify operations and improve access to data for all departments in your third-party logistics (3PL) business. This article goes in-depth on Microsoft software solutions and services that are essential for a modern 3PL provider.
For a Third-party Logistics (3PL) provider, software requirements vary significantly between departments. The logistics side needs comprehensive supply chain management solutions, while accounting needs a powerful financial management system, and sales needs a CRM. No one solution will fulfill the needs of an entire 3PL organization, but Microsoft is the only company currently offering a suite of solutions comprehensive enough to meet the needs of all departments in a 3PL business. Microsoft software for 3PL gives your business a unified foundation to facilitate a new level of efficiency across your entire organization. This article will detail the Microsoft solutions most applicable to third-party logistics. Use the list below to navigate to the solution area you want to explore first:
For a 3PL business to be successful and scale with ease in the modern ecosystem, a state-of-the-art ERP system must be employed. With Microsoft Dynamics 365 Finance and Supply Chain, businesses are given the correct tools to optimize operations and manage all aspects of an organization in a centralized software solution. A core reason why Microsoft Dynamics 365 is at the front of the ERP pack is because of its near endless capabilities and native integration with the rest of the Microsoft product suite. This prevents data siloing and helps connect all aspects of your business.
For Jason Chan, Vice President of Sales, Marketing, and Client Success at Rakuten Super Logistics, Dynamics 365 was a winning solution because of Dynamics 365’s ability to scale and cater to all departments within their business. Additionally, Microsoft’s status as a top-tier brand enticed them to select Dynamics 365.
When looking purely at Dynamics 365 ERP solutions, Dynamics 365 Finance is a comprehensive financial management platform that will cover the needs of any enterprise business. With the ability to support unlimited users, Dynamics 365 Finance has the power and scalability that a growing 3PL business requires. Everything from standard accounting functionality such as general ledger journals to advanced accounting tools using artificial intelligence are included in this multi-faceted solution. The ability to handle millions of invoice lines and transactions per billing period will be of interest to any established 3PL business. However, beyond finance tools, there are four main products that fall under the Microsoft Dynamics ERP umbrella that should stand out for 3PL businesses including:
In this article we will take a deeper dive into these Microsoft software solutions plus several more tools and services, explaining why they can be game-changers for your third-party logistics business.
One of the most essential Microsoft software puzzle pieces for 3PL companies is the IOM tool in Dynamics 365 Supply Chain. IOM is a newly released technology that rivals traditional EDI and saves a significant amount of money for Dynamics 365 Finance and Supply Chain, as well as Dynamics 365 Business Central users. IOM uses AI and real-time inventory data to optimize order fulfillment. Distributed order management (DOM) is employed for cost-effective, operationally efficient order fulfillment with real-time recommendations from the system. The tool is truly intelligent with the ability to recognize constraints for fulfillment and address them to save your warehouse team hassle. The tool offers a view of inventory across all warehouses and legal entities for centralized planning and allocation.
Additionally, users can build their own workflows using drag-and-drop tools. The creation of rules helps automate and simplify fulfillment processes. Drag and drop tools are also useful for modifying order journeys post-fulfillment. Allowing non-developers to automate processes in a user-friendly way is a significant value proposition and is in line with Microsoft’s initiatives to give these non-technical personas the tools to make their efficiency wishes a reality.
To reach the broad 3PL software audience, IOM integrates with your business’s ordering platform of preference including e-commerce, mobile applications, marketplace, and electronic data interchange (EDI). This compatibility makes the solution viable for almost any 3PL provider. 3PL is only becoming more important and businesses need to keep in mind scalability. Integration with many platforms facilitates this scalability.
The graphic below gives further insight into this process.
Avantiico’s third-party logistics billing software includes extensive billing features in a simple user interface for the creation and maintenance of customer contracts and the automation of data collection to provide insights real-time. A core feature of the Avantiico solution is that it ensures all contracted charges are captured. This allows for the creation of nuanced customer billing agreements that are supported within your Dynamics 365 ERP system. Beyond this, the solution has capabilities around fulfillment, automated customer billing based on schedules, and consequently, labor costs and operational complexities are reduced. One-time charges are also supported such as account setup fees and recurring charges can have constraints set up, for instance, a monthly minimum. Storage fees can be charged based on average or peak usage, pre-allocated space, climate control requirements, velocity, and/or other classifications. Shipping fees can be set up to include multiple charges such as a packaging material charge and/or handling fees for shipments. Fee structures can be defined for the receiving process based on item classification, weight, volume, or custom factors. Additional inventory management fees such as cycle counting, quality inspections, and handling receipt discrepancies are also covered by this comprehensive solution.
The solution runs completely within Dynamics 365 Finance and Supply Chain and when combined with Intelligent Order Management, provides the most comprehensive 3PL ERP software solution available. For more information on the solution, or to request a demo, visit our product page or our blog article.
The Dynamics 365 Warehouse Management System included in Dynamics 365 Supply Chain is a powerful efficiency-driving tool that will bring warehouse organization to the next level. Through intelligent data collection and application, picking, packing, and product allocation to warehouses can be optimized to minimize cost, effort, all while adding convenience for the end customer.
For Jason Chan of Rakuten Super Logistics, scalability is a key value proposition for software use in 3PL:
“3PL’s have that scale… The idea of scaling from 1,000 orders a day to 100,000 orders a day is huge. You need that many more hands to be able to complete those orders. You need technology in place… to make sure that you’re not having to pick by hand and pencil and paper, that there’s technology and optimization within that.”
Through an analysis of historical customer buying data, your business can build a deep understanding of the location that demand for certain products is coming from. Products will commonly have regional or seasonal demand due to environmental, cultural, or a plethora of other factors and this must be considered when stocking warehouses. Predicting demand from this valuable information can ensure your products are as close geographically to the end consumer as possible, while minimizing shipping cost and time. This saves your business money and hassle, while increasing customer satisfaction. When logistics providers are all in competition to get products to consumers the fastest, the only way to remain competitive is through strategic use of data. Power BI is a useful tool for this, as it can even create heatmaps for warehouse processes, giving another layer of insight into operational efficiency.
Additionally, Dynamics 365 WMS utilizes system-directed cluster picking to save time and walking distance for warehouse employees. The system generates efficient clusters that strategically direct employees to pick items for multiple orders at the same time. Over the course of weeks, months, and years, the time saved using this technique can add up, meaning employees can now create significantly more value than they previously could. This is especially useful for 3PL WMS and businesses that mainly deal in B2C, as it is focused towards less than full pallet picking. This can be easily set up using one of Microsoft’s guides. Once items are picked, they must be packed for shipment and Dynamics 365 WMS software has included tools for this step as well. Employees check off item types and quantities and the system allocates the products to optimal containers. Alternatively, pre-determined product kits can be configured in the system. Then, the order is moved to the outbound dock, which brings us to the need for TMS.
Once the order is ready to be sent to the customer, Dynamics 365 TMS can take over. As with Dynamics 365 WMS, the TMS module is part of the Supply Chain application. This solution allows businesses to utilize their existing trucks in a more optimal way. The module is a massive value add for third party logistics because of its ability to identify both fastest routes and cheapest shipment rates for your goods, even passing on transportation charges directly to the customer when appropriate. If prices are factored into product costs, TMS can collect data on actual shipping costs to update product prices. The module is applicable to both inbound and outbound shipping. Here is a diagram illustrating a sample outbound shipping process using the TMS module:
Beyond efficient route planning, TMS also supports load-building functionality. Using load templates, users can factor in maximum height and weight with Dynamics 365 TMS’s volume-based load-building strategy. However, if you would like to build your own templates, that is also supported.
The potential savings due to efficient transportation management are massive for 3PL. No other industry deals with transportation and associated costs more than 3PL. Microsoft’s TMS solution can help third-party logistics businesses cut costs while reaching customers in a more efficient manner. That is why optimized TMS is an essential puzzle piece for an ideal 3PL software suite.
Another logistics-focused Microsoft solution is the Dynamics 365 Landed Cost module. Landed Cost focuses on the inbound shipping process, with a specialization in importing. With many 3PL businesses dealing with international supply chains, 3PL software that is designed to handle the complications that come with international shipping must be employed. From a planning and visibility perspective, Landed Costs holds significant value. Many 3PLs face visibility issues during the importing process, which can often be an issue for customers transparency. Customers hold their logistics providers to higher standards each year with businesses fighting to be the fastest and give their clients the information they need about shipments. However, if you do not have the visibility of your supply chain to give accurate updates it can cause your business unnecessary grief. The importance of this has only been exasperated because of the COVID-19 pandemic. With long lead times and port space at a premium, Landed Cost has become an essential 3PL software tool.
Dynamics 365 Landed Cost’s functionality extend to the financial side as well. Transportation costs and tariffs are accounted for in the system. The party responsible for costs are determined by Incoterms supported by the module. Costs can be determined up-front and then changed later to facilitate quick decision-making while allowing for the flexibility necessary for the often-uncertain nature of international procurement. Save headaches for you, your suppliers, and your customers with the Landed Cost module for 3PL.
Now that the logistics aspects are covered, lets turn our attention to customer engagement software for third-party logistics. Whether your business is predominantly dealing in B2C or B2B, proper customer relationship management software (CRM) can revolutionize your customer-facing processes. The Dynamics 365 Customer Engagement solutions that will benefit 3PL providers most are Dynamics 365 Sales, Dynamics 365 Customer Service, and Dynamics 365 Marketing. These solutions offer users exceptional uptime and ease of use. As with all Dynamics 365 products, a SLA (service level agreement) of 99% or above is included. Uptime is a major pain point for many CRM software users and Microsoft works hard to provide the best in the industry with backing from their Azure cloud. To minimize training across these applications, Microsoft has created the Unified Interface. The Unified Interface creates the same user experience across these applications by utilizing the same design.
The Dynamics 365 Sales solution helps your team manage contacts, nurture leads, and track communications in a centralized manner. Microsoft keeps their CRM tools intuitive for easy training of new employees and information sharing simplicity. The importance of diligent tracking of customer information in the CRM software cannot be understated as it has a direct effect on several departments and the customer. Quality sales data can be rocket fuel for marketing campaigns, providing the insights to build accurate buyer personas. Furthermore, customer service can use these datapoints and tracked communications for context to better meet customer needs down the road.
Delving further into the marketing aspect of Dynamics 365 Customer Engagement applications, lead generation and marketing automation are core value propositions for the Dynamics 365 Marketing solution. Dynamics 365 Marketing gives users the tools to nurture leads and visualize lead acquisition through personalized dashboards. Through integration with Dynamics 365 Sales, Dynamics 365 Marketing cuts the time from lead identification to qualification to first contact. When used alongside Power Platform tools such as Power Automate, you can even send automatic follow-ups to your leads. Dynamics 365 Marketing allows your team to engage your audience and drive traffic to events, important website resources, and any other content you want your contacts to interact with.
Once the order is ready to be sent to the customer, Dynamics 365 TMS can take over. As with Dynamics 365 WMS, the TMS module is part of the Supply Chain application. This solution allows businesses to utilize their existing trucks in a more optimal way. The module is a massive value add for 3PL because of its ability to identify both fastest routes and cheapest shipment rates for your goods, even passing on transportation charges directly to the customer when appropriate. If prices are factored into product costs, TMS can collect data on actual shipping costs to update product prices. The module is applicable to both inbound and outbound shipping. Here is a diagram illustrating a sample outbound shipping process using the TMS module:
Microsoft’s Power Platform can be used to ensure your business is getting the most value from your Dynamics 365 Customer Engagement application suite and create tools that increase efficiency using a low code/no code platform. The Power Platform is built on Microsoft’s Dataverse that contains all the data types used in the Dynamics 365 Customer Engagement applications. This allows users to create workflows and build unique customizations in Dynamics 365 Customer Engagement. The four tools included as part of the Power Platform are Power Apps, Power Automate, Power BI, and Power Virtual Agents. There are specific functions included in the Power Platform that are of particular use to third-party logistics businesses.
Power Apps gives “citizen developers” (as Microsoft likes to call them), as well as experienced technical personas, the tools to automate and replace outdated business processes. Paper-based tasks and most data entry can be eliminated using Power Apps. AI functions can read through files and classify data without human assistance. This can save countless hours of data entry for your team and reduce the possibility of human error.
The most game-changing Power Apps tools for a majority of 3PL businesses are Power Apps Portals. Power Apps Portals are external-facing websites where clients can interact with their own data, place orders, and access any other information your company deems necessary, such as view-only invoices (example Power Apps Portal can be seen below). This is of significant value for 3PL providers because it eliminates the human barriers to information for your clients. Consequently, your clients are delighted by easy access to the information they need, and your business can be confident about the correct inventory data, invoices, etc. being presented to them. Not only does the solution save customer service time, it saves confusion for all parties.
Financial information such as invoices can be viewed real-time in the Power Apps Portals because of an essential Microsoft integration, dual write. Dual write syncs information from your Dynamics 365 ERP system with your Dynamics 365 Customer Engagement solutions, utilizing rules to push information either in an editable or read-only format. This allows organizations to uphold their ERP systems as the version of truth while giving sales personnel access to essential warehouse and financial information. Furthermore, pushing inventory data and invoices from Dynamics 365 Finance and Supply Chain to Dynamics 365 Customer Engagement allows for real-time customer interaction with this information in the Power Apps Portal.
Dual write eliminates data silos between Dynamics 365 Customer Engagement applications and Dynamics 365 Finance and Supply Chain. Without this integration, financial information would not be shareable real-time through the Power Apps Portal.
To facilitate the necessary visibility and optimization for a large, distributed network of warehouses and employees, the Microsoft cloud is a must have. Microsoft’s cloud computing service, Microsoft Azure, gives your business the freedom to scale. With solutions that leverage machine learning and AI, connect devices remotely, and trace your shipments, the possibilities with Azure are endless. Let’s explore a few core solutions that will be of use to any third-party logistics business.
Azure AI and machine learning are useful for any modern business with many moving parts, but it is of particular use for 3PL. Azure’s AI can provide recommendations and simulate scenarios across your supply chain. This means that using historical data, Azure’s machine learning functions can provide inventory recommendations and even predict disruptions in your supply chain. Accurate demand prediction and AI work together to automate core processes such as sourcing and inventory optimization to avoid wasting money on warehousing unnecessary products, while making sure your business can be ready for a spike in demand.
Additionally, Azure Blockchain is a valuable tool for any business involved in logistics. Greatly enhancing visibility and traceability, Azure Blockchain ensures that products are identifiable, and the history of that product can be determined with a simple scan. This is highly valuable in a recall situation and can save significant time.
Beyond these essential tools, Azure IoT is valuable for any business that manages its own transportation. IoT monitors key pieces of information about your fleet of trucks, planes, boats, etc. IoT allows 3PL providers to monitor the performance of their fleet in real-time and respond to any disruptions that might occur. Tracking vehicles and their cargo while deliveries are in progress provides a new level of visibility once shipments leave your warehouse. Giving your business the tools to stay informed and keep customers informed on their orders, IoT is a game-changer for logistics.
Microsoft provides the most comprehensive suite of software tools for 3PL currently available, and that toolset is constantly expanding. Just in 2021, Microsoft has released the Landed Cost Module and Intelligent Order Management, continuing to prove their commitment to the logistics space. If your business wants to implement a unified suite of software solutions for third-party logistics, Microsoft is the closest your business will find to a one-stop-shop. Connect your data and optimize your entire company’s operations with Microsoft solutions for 3PL. To learn more about the 3PL industry as a whole, read our 3PL Essentials blog article.
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