What is 3PL Software? Features, Benefits, and Selection Guide

Managing logistics is not easy. As businesses expand, keeping track of warehousing, shipping, and inventory becomes increasingly complex. That’s where 3PL (Third-Party Logistics) software helps companies handle their supply chain operations efficiently.

3PL helps businesses coordinate everything from warehouse operations and inventory tracking to order fulfillment and shipping.

The numbers tell an interesting story: 

The 3PL industry is experiencing remarkable growth.

In 2023, it was valued at over $1 trillion, and it’s expected to expand steadily in the coming years. Similarly, the 3PL software market is set to double in value by 2030, showing how essential technology has become in logistics.

So, in this guide, we’ll break down everything you need to know about 3PL software: what it is, how it works, key features, benefits, and how to choose the best 3PL software for your business.

Let’s start!

What is 3PL software?

3PL software, short for third-party logistics software, is a technology solution that helps logistics and supply chain companies optimize and manage their operations in a better way. It handles tasks like tracking orders, keeping tabs on inventory, organizing warehouses, managing transportation, and handling billing.

Essentially, 3PL software is like a command center for third-party logistics companies, making sure everything runs smoothly and efficiently.

How 3PL Software Works

At its core, 3PL software connects three main parts of your logistics operation: receiving products, storing them, and shipping them to customers. Here’s how 3PL software works and handles each part:

Receiving products

When products arrive at your warehouse, 3PL software helps you:

• Record what items arrived and their quantities
• Check if the delivery matches your purchase order
• Assign storage locations for the products
• Create digital records with important details like batch numbers and expiration dates

Managing inventory

Once products are in your warehouse, the software keeps track of:

• How many items you have in stock
• Where each item is stored
• When stock is running low
• Which products are selling fastest
• When you need to order more

Processing orders

When a customer places an order, the software:

• Finds the items in your warehouse
• Creates picking lists for warehouse staff
• Chooses the best shipping method
• Prints shipping labels
• Updates inventory counts automatically

Real-time updates

One of the best things about 3PL software is that it updates information instantly. When someone picks an item from a shelf, everyone using the system sees the new stock level right away. This helps prevent mistakes like overselling or running out of popular items.

Working with other systems

3PL software doesn’t work alone. It connects with:

• Your online store
• Shopping platforms like Amazon or eBay
• Shipping carriers like FedEx or UPS
• Your route optimization software
• Your accounting software

This means when a customer buys something from your online store, the 3PL software automatically receives the order and starts processing it.

Tracking and reports

The software also helps you understand how well your operation is running by:

• Showing which products are selling best
• Tracking how quickly orders are processed
• Monitoring shipping costs
• Identifying areas where you can save money

While this process might sound complex, the software is designed to make these processes simpler and more efficient. Most 3PL software providers offer training and support to help you get started, so you don’t need to be a tech expert to use it effectively.

Types of 3PL Software

When you start looking for 3PL software, you’ll find several different types available. Let’s explore the five main types to help you understand which one might work best for your needs.

1. Warehouse Management Systems (WMS)

A warehouse management system software forms the core technological foundation for 3PLs providing warehousing and fulfillment center services. Warehouse management software oversees critical warehouse operations, including:

• Inventory tracking: Get real-time updates on stock levels across different warehouse locations.
• Order processing: Allocate orders based on stock availability and delivery deadlines.
• Task automation: Automate picking, packing, and restocking for faster operations.
• Performance insights: Analyze inventory turnover and storage efficiency to improve warehouse productivity.

A WMS reduces errors, speeds up fulfillment, and optimizes warehouse space, making third-party logistics operations smoother.

2. Transportation Management Systems (TMS)

Transportation management systems enable 3PLs to manage the fleet efficiently and execute freight movements for their last-mile logistics clients. Key capabilities include:

• Multi-mode shipping: Manage shipments across trucks (LTL and FTL), rail, air, and ocean.
• Route optimization: Plan the most efficient delivery routes to save time and fuel costs.
• Carrier management: Connect with different carriers for booking and tracking deliveries.
• Billing automation: Handle freight invoices and payment processing effortlessly.

Modern cloud-based TMS solutions help 3PLs reduce shipping costs, improve delivery times, and ensure real-time shipment tracking.

3. Order & inventory management system software

Order management systems designed for 3PLs focus on the core planning and execution capabilities required for omnichannel order fulfillment, including:

• Order fulfillment: Allocate orders to the best warehouse based on stock levels and delivery timelines.
• Inventory visibility: Track inventory across warehouses, stores, and fulfillment centers.
• Automated restocking: Set reorder points to ensure stock availability without over-purchasing.
• Returns management: Simplify customer returns, refunds, and exchanges.

This software enhances order accuracy and ensures timely fulfillment, improving customer satisfaction.

4. Enterprise Resource Planning (ERP) software

A 3PL ERP software integrates third-party logistics operations with financial management. It helps track expenses, manage assets, and ensure compliance in one system.

• Financial management: Automate invoicing, payments, and chargeback handling.
• Asset tracking: Monitor warehouse equipment, delivery fleets, and other critical assets.
• Compliance and reporting: Ensure compliance with industry regulations and manage audits.
• Data insights: Generate reports for financial planning and operational improvements.

An ERP helps 3PL providers manage both day-to-day logistics and long-term financial planning in one platform.

5. Supply Chain Management (SCM) suites

SCM software provides an integrated command center for managing end-to-end supply chain operations:

• End-to-end full visibility: Track orders from purchase to last-mile delivery.
• Demand forecasting: Use historical data to predict demand and prevent stockouts.
• Supplier coordination: Ensure smooth collaboration with suppliers and manufacturers.
• Supply chain optimization: Analyze performance to improve efficiency and reduce costs.

Supply chain management software helps 3PL businesses stay agile, plan better, and respond quickly to supply chain disruptions.

11 Key Features of 3PL Software

3PL software platforms come equipped with a diverse set of capabilities to meet varied operational requirements. 

However, there are some core functionalities that enable these solutions to deliver enhanced efficiency, deeper supply chain insights, and superior customer service.

Some key features of 3PL software include:

1. Warehouse management: Efficiently manage warehouse operations, including inventory tracking, receiving, putaway, picking, packing, and shipping.
2. Transportation management: Optimize transportation routes, manage carrier contracts, track shipments in real time, and ensure on-time deliveries.
3. Inventory management: Maintain accurate inventory levels across multiple locations, track stock movements, monitor stock levels, and implement inventory optimization strategies.
4. Order management: Streamline order processing, manage order fulfillment centers, track order status, and handle returns and exchanges.
5. Supply chain visibility: Provide real time visibility into the entire supply chain, allowing stakeholders to track shipments, monitor inventory levels, and identify potential bottlenecks or delays.
6. Reporting and analytics: Generate reports and analytics to gain insights into key performance metrics such as order fulfillment rates, inventory turnover, transportation costs, and warehouse efficiency.
7. Integration capabilities: Integrate with other systems, such as enterprise resource planning (ERP) software, customer relationship management (CRM) systems, e-commerce platforms, and carrier systems for seamless data exchange and workflow automation.
8. Billing and invoicing: Automate billing processes, generate invoices based on shipment data, track billing and payment status, and manage customer accounts.
9. Compliance and regulatory support: Ensure compliance with industry regulations and standards, such as customs regulations, trade compliance, hazardous materials handling, and international shipping requirements.
10. Customer portal: Provide customers with self-service capabilities to track orders, manage returns, access documentation, and communicate with customer support.
11. Mobile accessibility: Offer mobile apps or mobile-friendly interfaces to enable users to access critical logistics information and perform key tasks on the go.

Benefits of 3PL Software

Implementing third-party logistics (3PL) software offers a range of benefits to businesses looking to streamline and optimize their logistics operations. 

Some key benefits include:

1. Improved operational efficiency

3PL software enables logistics providers to manage operations more efficiently by automating manual tasks, streamlining workflows, and providing real-time visibility into orders and inventory.

 In fact, 75% of organizations say workflow automation provides them a significant advantage over their competitors.

2. Reduced operational costs

Using 3PL software can lead to significant cost savings. 

Solutions like Upper’s route optimization software, which integrates with 3PL software, optimize shipping routes. This ensures drivers take the most time-saving paths, ultimately reducing fuel consumption and labor costs.

3PL software, by optimizing inventory levels, helps reduce excess stock. Additionally, automating tasks means you can save on labor costs, allowing your team to focus on more strategic activities.

3. Enhanced supply chain visibility

Powerful analytics dashboards provide insights into key performance metrics across warehousing, transportation, and delivery. 

With real time visibility into inventory levels, shipment status, and overall supply chain performance, 3PL software enables businesses to make informed decisions. It even helps them respond quickly to changing conditions such as sudden fluctuations in demand, unexpected disruptions in transportation, delays in production, or changes in market trends.

Additionally, granular data helps identify improvement areas to achieve cost-effective logistical operations.

4. Greater scalability

As a logistics company grows, it can use 3PL software to handle more work without extra staff or space. 

The software makes adding more warehouses, customers, and regions an easy process. This is done through flexible setup options and modular processes. This enables fast business growth without major disruptions.

5. Optimized Inventory Management

The software helps businesses keep the right amount of products in stock so they don’t run out or have too much. 

The features in 3PL software help businesses manage inventory levels, reduce stockouts and overstock situations, and improve inventory turnover rates.

6. Reduced operational risks

Automating order and inventory management activities reduces costly human errors like shipment delays and misplaced inventory. Advanced algorithms also allow proactive fixing of issues before they impact customers.

7. Better customer service

With 3PL software, you can offer faster deliveries, accurate order fulfillment, and real-time order tracking with timely updates to your customers. 

This level of communication builds trust and encourages repeat business.

8. Regulatory compliance

3PL software solutions make it simpler to maintain compliance across regions via seamless customs documentation, label printing, shipment tax calculation, and leveraging denied party screenings. This prevents penalties and shipment delays.

9. Better decision-making with data insights

3PL software collects and analyzes data to help logistics providers make informed decisions. 

Performance analytics, demand forecasting, and cost tracking enable businesses to optimize operations and reduce inefficiencies.

Signs that You Need 3PL Software

I’ll divide these signs into the two categories while maintaining the exact wording:

Business Growth Outpacing Current Systems

• Finding it hard to manage increased orders, shipments, and inventory levels
• Warehouse space crunches causing stock bottlenecks
• No systems for forecasting demand patterns or fulfillment network capacity modeling
• Repeated shipping delays and mistakes indicate overly manual processes
• Manual effort is needed for data exchange across platforms
• Inability to track orders or inventory levels in real-time
• Unsure of how much inventory you have on hand or where it’s located
• Unable to measure key performance metrics like order fulfillment rates, inventory turnover, and transportation costs
• Struggling to optimize transportation costs, warehouse space utilization, or inventory carrying costs

Increased Customer Complaints about Service Delays:

• Struggling to meet fast, accurate, and reliable order fulfillment and delivery that customers expect the most.
• Invoices frequently dispute actual services consumed
• Dealing with the complexities of international shipping, including customs clearance, regulatory compliance, and documentation requirements

How to Choose the Best 3PL Software

Selecting the right 3PL software is a big decision for your business. Let’s walk through the key factors you should consider to make the best choice for your needs.

1. Identify your business needs

3PL software solutions are not one size fits all. Some focus on warehouse management, while others specialize in transportation planning or order fulfillment. Before choosing a platform, assess your business requirements:

• Do you need warehouse management to track inventory and improve storage?
• Do you require a transportation management system to optimize deliveries?
• Are you looking for an order management system to streamline fulfillment?
• Do you need an all-in-one solution that covers multiple logistics functions?

Understand your needs and then choose software accordingly.

2. Look for essential features

A good 3PL software should provide features that simplify operations. Real-time tracking helps you monitor shipments and warehouse performance, while route optimization software ensures deliveries are made on time without unnecessary costs. 

A strong inventory management system prevents stock shortages or overstocking, and automation reduces manual work in order processing, invoicing, and shipment tracking. 

Also, make sure the software is scalable so it can support your business as it grows.

3. Check for seamless integrations

Your logistics system needs to work seamlessly with the tools you already use. 

Ensure that the software integrates with e-commerce platforms, shipping carriers, accounting tools, and ERP or CRM systems. This makes it easy to manage the operations and eliminates errors due to manual data entry.

4. Consider user-friendliness

Complex software can slow down operations and make it hard for your team to use it. 

Choose a system that is easy to use, has a clean interface, and doesn’t require extensive training. A well-designed platform ensures that your employees can quickly adapt, keeping efficiency high.

5. Prioritize security and compliance

Since 3PL software handles sensitive data like customer information, payments, and inventory records, security should be a top priority. 

Look for a system that offers data encryption, access controls, and compliance with industry regulations. This will help protect your business from data breaches and ensure that you meet legal requirements.

6. Compare pricing and ROI

Cost is an important factor, but don’t focus on the cheapest option because this isn’t always the best. 

Compare pricing plans and consider the value you’re getting. Some solutions offer transparent pricing, while others may have hidden fees. 

If possible, take advantage of a free trial or demo to test the software before committing. 

7. Read reviews and assess customer support

Before making a decision, check reviews from other businesses in the 3PL industry. Look for feedback on performance, reliability, and customer support. A responsive support team can make a big difference, especially when you need quick assistance with technical issues.

Top 5 Best 3PL Software

1. ShipBob: Best for growing e-commerce stores needing nationwide shipping

ShipBob is a popular 3PL software designed for e-commerce businesses that need fast and reliable order fulfillment. It offers inventory management, warehouse automation, and real-time tracking, making it a strong option for brands looking to scale. 

ShipBob integrates with major e-commerce platforms like Shopify, WooCommerce, and Amazon, ensuring seamless order processing. 

However, while it provides 2-day shipping and distributed fulfillment centers, pricing can be unpredictable, especially for small businesses. Some users have reported occasional inventory discrepancies and slower customer support responses. 

That said, its tech-driven approach, analytics, and fulfillment network make it a solid choice for businesses looking for a full-service 3PL provider. If you’re scaling an e-commerce store and need end-to-end logistics, ShipBob is worth considering.

2. Extensiv: Best for mid-sized logistics companies requiring advanced multi-channel inventory intelligence

Previously known as 3PL Central, Extensiv provides warehouse management solutions (WMS) tailored for third-party logistics providers. It focuses on automating inventory, order processing, and warehouse operations, helping logistics companies optimize workflows. 

The software is cloud-based, offering multi-client support, real-time data tracking, and API integrations. 

While it’s great for mid-sized to large 3PLs, smaller businesses may find its features overwhelming. Pricing is also on the higher side, and the learning curve can be steep. Customer support is generally responsive, but some users report delays in resolving issues.

Despite these drawbacks, Extensiv is a powerful WMS that helps logistics providers scale with automation, reporting, and workflow optimization. If your business handles multiple clients and needs a reliable warehouse solution, Extensiv is worth considering.

3. ShipHero: Best for small to medium e-commerce brands wanting a user-friendly warehouse management system 

ShipHero is a cloud-based 3PL software designed for warehouses and fulfillment centers. It excels in inventory tracking, order management, and shipping automation, making it a great choice for e-commerce brands. 

The platform integrates well with Shopify, Amazon, and other marketplaces, ensuring smooth operations. One of its biggest advantages is its user-friendly interface, making it easy to set up and manage. 

However, some users report occasional inventory sync issues and minor glitches in reporting. While the software is scalable, pricing can be high for smaller businesses. 

ShipHero offers both a 3PL solution and a warehouse management system, making it a flexible option depending on your needs. If you’re looking for a feature-rich fulfillment software with e-commerce integrations, ShipHero is a strong contender.

4. Magaya: Best for international logistics providers needing comprehensive global shipping

Magaya is an all-in-one 3PL and supply chain management software catering to freight forwarders, logistics providers, and warehouse operators. It covers freight management, customs compliance, inventory tracking, and automation tools. 

The platform integrates with accounting software, e-commerce systems, and TMS solutions, making it a versatile choice. 

While Magaya offers strong visibility and reporting features, the interface feels outdated, and some users find it less intuitive. Additionally, onboarding and implementation can take time, which might not be ideal for businesses needing a quick setup. Customer support is reliable but can be slow during peak times. 

Despite these minor drawbacks, Magaya is a solid 3PL software for businesses that need comprehensive supply chain management with strong compliance features.

5. Deposco: Best for enterprise-level businesses needing AI-driven inventory forecasting and warehouse optimization

Deposco is a powerful cloud-based supply chain software offering inventory visibility, warehouse management, and order fulfillment in one platform. It caters to retailers, wholesalers, and 3PL providers that need real-time control over logistics. 

The software stands out for its AI-driven analytics, automation tools, and demand forecasting, which help businesses optimize operations. 

However, Deposco’s setup can be complex, and some users feel the interface isn’t as intuitive as competitors like ShipBob or ShipHero. Pricing isn’t transparent, so businesses need to request a custom quote. 

That said, its scalability, deep analytics, and real-time inventory tracking make it a strong choice for companies handling high-volume logistics. If you need enterprise-level 3PL software with advanced automation, Deposco is worth considering.

💡Note:

While the above tools cover various aspects of 3PL management, businesses handling local deliveries might need a dedicated route optimization solution. 

Upper stands out as a top choice for last-mile logistics, offering effortless route planning, optimization, scheduling, real-time tracking, proof of delivery, and even analytics, all on one platform, to enhance efficiency.

Give it a try for free!

Simplify and Automate Your Intricate Logistical Operations with 3PL Software

Satisfying customers’ shipping expectations is a crucial part of a business’s logistical operations. That’s where 3PL software comes in.

By bringing together different logistics tasks on one platform, 3PL solutions improve visibility and coordination and provide insights. They focus on tasks like planning transportation, optimizing warehouses, and managing orders efficiently.

If you’re facing issues like inconsistent delivery times or difficulty tracking shipments and inventory, it’s time to consider 3PL real-time tracking software. It helps you handle daily challenges and adapt to changes in the market, keeping your business competitive.

Ultimately, meeting customer demands requires a strong supply chain, and 3PL software provides the technology needed to achieve that.