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Third Party Logistics (3PL) Integration and Automation Options

2022-08-29
by Jodi Abrams

With consumers and Amazon driving the trend towards same day and next day delivery, many companies are using a network of 3PL's around the country in their distribution model. Choosing to partner with 1 or more logistics companies to help with the distribution of your products is becoming more commonplace. If these are not set up to be automated, it may get products into your customer hands faster, but at what cost?

With the increased options for 3PL's comes an even more diverse set of options for integration. The different methods have their pro's and con's but each have a place where they can help you streamline your business processes. While the typical flow of data will remain the same, the method of connecting can be drastically different.

API's

Using an API (Application Programming Interface) is a common method for 3PL integration. It is usually driven by the logistics software that your 3PL partner uses. If their software supports API integration they will likely push you towards that direction. With API integration, a back-end system call would be made to your 3PL to either give them information (such as the details of an order to be shipped), or request information (such as the updated shipping status of an order). Each time you set up API's integration with a different 3PL, expect it to be completely different. Some differences are in their API definition, workflow to sending and receiving updates, and required and optional information. This can make it time consuming to set each one up on your own if you are trying to program these from scratch in house. Working with a tool or company that has API templates, and may have even worked with these 3PL's before will allow for a quicker onboarding process.

XML

XML is a standard file format that has been around for over 25 years. It is simple and robust all at the same time. While it does have more of a standard to it than API's, the exact fields used, and naming conventions will still vary from 3PL to 3PL. With XML you would send data to your 3PL that they need (such as what to expect to receive on their next inbound shipment) and they would send information back (such as what they did receive on the shipment). Both parties would have to comply to the agreed upon XML definition, and field to include in the transmission.

Flat Files or CSV Files

Flat or CSV files are either positional or delimited files that you can exchange with your 3PL. You could combine many orders into one file or have a file per order that you are sending. They will include a mutually agreed upon order of your fields as well as definitions regarding field formats and lengths. These formats will likely be unique to each 3PL you work with, so a mapping will need to be done for each. These files are simple to understand and process, but with the simplicity there may not be enough data points to handle some complex situations such as detailed palletization.

EDI

EDI (Electronic Data Interchange) is a tried and tested communication method that has been in place for over 50 years. It is robust and comprehensive, and will have fields and transactions to handle all situations. It will also be the way to keep your integrations as standard as possible across 3PL's. However, not all 3PL's are capable of EDI. They do not all have an internal system capable of translating those messages into a format they can use and might not yet have an integration partner they work with. For this reason they may push you away from EDI towards a different method. You could help suggest an integration partner for them, or find a partner yourself that can support these other methods.

Integration into your ERP system

Depending on what system you are running internally to manage and track orders and shipments you may be able to utilize one of these options as well. At a minimum a flat file export and import is something most systems can provide even if there are some manual steps involved. You may have to slowly build up the integration into your system, but even if there is some manual work involved, automating the process on the side of your 3PL will often reduce your costs with them, speed up their performance and greatly reduce costly manual errors.



No matter what option your 3PL chooses, setting up the integration is going to make your process much smoother and less error prone than a manual workaround often comprising of emails, and phone calls. Working with a company with extensive 3PL and integration experience will take big load off of your IT and business teams. A solution like Arcus with no up front cost for your integration is a quick and cost effective way to get started and gain those process efficiencies and resulting financial gains quickly and painlessly. For more information, or to discuss your specific business scenario, please reach out to us at info@contax.com



About the author: Jodi Abrams

Jodi is an expert in SAP and eCommerce integration, and is Vice President of Applications for CONTAX.