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The Integral Blog

The Integral Blog

OmniChannel Part 5: The Technology Burden for 3PLs

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This is the final article in this series on omnichannel.

The technology burden lies with 3PLs to accommodate the different ordering methods their customers prefer to use. EDI was created 30 years ago to bring a level of standardization to data formats in B2B exchanges. It has lived up to expectations for some, but not everyone (see EDI: A standard that’s not really standard). There are other data formats like CSV and XML, and it’s up to the 3PL to accommodate those formats too. Now that eCommerce is prominent for B2C exchanges, there is new technology for 3PLs to support in the form of shopping carts.

The problem with shopping carts is that they don’t use EDI, nor do they have a standard of their own. One shopping cart will format orders in a completely different manner than another cart. A 3PL is going to have to support accepting orders from many different shopping carts, usually through APIs. Then, orders must be mapped from the shopping cart into your WMS. It’s the EDI nightmare all over again.

Compared to EDI, shopping cart software is still relatively new. EDI has become a commodity and there are many competitive offerings in the marketplace for a 3PL to shop around and get the best price. Shopping carts on the other hand have many competitors in the marketplace jockeying for position. This means you pay a premium for shopping cart IT expertise until such time the industry has matured. That’s the way new technology always works. You pay more for the privilege until it becomes a commodity.

As a 3PL service provider you have to keep asking yourself, are you in the warehousing and distribution business or in the IT business? (see The ideal time to change your EDI system) While the burden falls on the 3PL to accommodate different technology in an omnichannel environment, it doesn’t mean a 3PL has to pay through the nose for an IT department to get things done. When the burden is too much, it’s time to make a business decision whether to outsource order management or keep it in-house.

The biggest advantage for keeping order management in-house is that the 3PL has direct control over the IT department. The biggest advantage for outsourcing is that IT costs are less when paying someone else to do the job. It’s better to keep the focus and energy on running a successful 3PL business and partnering with a 3rd party to handle the IT aspects instead.

Naturally, I’m in favour of outsourcing order management because this is our specially at Integral Group.
See Part 1 - What is Omnichannel?
See Part 2 - New Buying Practices
See Part 3 - Order Management
See Part 4 - Warehouse Management