How to Boost Efficiency for Your 3PL Warehouse

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In 2020, e-commerce grew from 14% to 17% of global retail trade. Third-party logistics (3PL) providers are major players in fulfilling those online orders. In fact, from 2021 through 2026, the 3PL sector will achieve a predicted annual growth of 8%. Consequently, with higher demand today for third-party logistics warehouses, you need to optimize your warehouse to meet the increased needs of the businesses you ship for and remain competitive in the industry.

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Challenges Facing the 3PL Industry

The rising demand for warehouses for distribution also comes with many challenges. To become and remain competitive, you must find out which of these issues your facility faces and how to overcome them.

1. Acquiring and Retaining Customers

In 2021, 74% of 3PL providers indicated finding and keeping customers was one of their top concerns. Acquiring customers may require additional marketing. However, to keep existing customers, you need to know how to boost warehouse efficiency. A more productive warehouse reduces the chances of missing shipments or failing to meet customer demands.

2. Meeting Delivery Time Expectations

Your clients and their customers expect fast fulfillment and delivery. 3PL warehouses are responsible for keeping their customers’ inventory organized for fast retrieval and for managing an efficient picking and packing process. They may also need to coordinate shipping with transportation providers. In the warehouse, they must use a system that allows them to prepare orders and schedule transportation to meet demanding two-day and even one-day delivery windows. To avoid disruptions with carriers, 3PL providers must plan for transportation delays and create contingency plans.

3. Investing in Technology

Whether to invest in technology and how much money to put into new equipment is another top concern among 3PL providers. Technological investments, especially automation, can take time to show return on investment (ROI). However, time may not be a luxury available to some 3PL providers. Therefore, they must find ways to balance investments with current funds. Failing to put some money into technological upgrades could compromise the providers’ abilities to remain competitive in the future.

4. Finding Qualified Labor

Finding labor, along with training and keeping new workers, represents an ongoing struggle in the logistics sector. Finding qualified people for warehouse positions can be difficult. Plus, with a more technologically advanced facility, workers may require additional training to use the equipment. However, 3PL warehouse efficiency relies on those who work in it. Therefore, filling jobs is vital to the facility’s operations.

5. Improving Warehouse Capacity

As many facilities take on more customers or store more products, they find their warehouses reaching capacity. Purchasing more real estate for additional warehouses may not be financially feasible. Therefore, the limited capacity may seem like a daunting problem for many 3PL providers. However, you can increase warehouse capacity without purchasing more land or buildings. Increasing vertical storage and using storage systems that can be quickly reconfigured to meet changing needs can alleviate capacity needs.

Five Ways to Boost Efficiency for Your 3PL Warehouse


Improving efficiency may require both major and minor changes in how you run your warehouse. However, investing time and money in these improvements can help your business thrive. If you identify with any of the above challenges facing the industry, consider some of these solutions.

1. Log Changes in Warehouse Procedures

While monitoring your warehouse for inventory errors is essential, discovering the reasons behind those mistakes requires more data collection and analysis. Log all changes to your facility over time. These changes include new staff members, workers who change assignments, management changes, new training, added equipment, facility upgrades and more.

By gathering as much information about your facility as possible, you can correlate errors in inventory with recent employee activities or changes in operations. Use this information to prevent future issues. For instance, you may need to improve the training of new and current employees, especially if you bring in new equipment or procedures.

2. Consider Automation

Automation could drastically change how your warehouse operates. However, the investment for major automation systems such as automated storage and retrieval systems (AS/RS) is high. If you have the means of using AS/RS in your warehouse, you could increase productivity by 85% and use up to 85% of currently unused floor space. AS/RS uses computers to control where you store products in your warehouse. The computer also directs automated systems to retrieve parts or products as needed with up to 99.9% accuracy.

3. Reduce Worker Efforts to Maximize Their Efficiency

Improving operations by making key tasks faster and easier can ease your labor problems. Many labor issues stem from inefficient work from current staff. However, by providing workers with the tools they need to increase their efficiency, they can do more with their time on the clock, reducing the need for additional labor.

Ways to improve worker efforts may include computer-directed order picking that optimizes routes through the warehouse for product retrieval. You may also want to eliminate paper packing slips and the additional steps they require. Substitute barcode scanners or tablets for the workers to scan items as they pull them to verify order accuracy and improve efficiency.

4. Consider ROI — Not Just Upfront Prices — When Evaluating Costs of Investing in Technology

While investing in technology seems daunting when looking at the initial costs, don’t focus only on the purchase price. Consider the ROI of any technology that you invest in and how it will impact efficiency and productivity. Many types of new equipment will require additional employee training. Therefore, ask yourself, will your workers be more productive when using the technology? Depending on the potential productivity increase, it may be worth the added training time. For example, AS/RS provides significant increases in facility productivity. It may be an option when considering long-term technological investments.

5. Integrate Lean Best Practices

Remember to use lean practices for your business. The principle behind lean operations is doing more with less by optimizing various aspects of your facility. Minimizing waste, organizing your workplace and reducing your inventory are ways to incorporate lean practices into your warehouse for distribution.

One example of lean practices is 5S. This practice is a way to declutter your facility, keep it clean and organized, improve safety and boost worker morale. Having a clean and organized facility reduces wasted time from workers not being able to find things. The 5S stands for the steps of this practice:

  • Sort: Sort through current parts, products, cleaning supplies and materials and eliminate or store things you don’t currently need.
  • Set in Order: Organize the remaining elements in clearly labeled areas. Tool shadow tape can visually remind workers of where to store items. 
  • Shine: Clean up the area and keep it tidy.
  • Standardize: Establish a regular cleaning and organizing schedule to stay on top of your facility’s cleanliness
  • Sustain: Keep practicing the first four steps to keep your facility clean, safe and well-organized

Using lean practices, including 5S, can save time and money while boosting productivity.

3PL Equipment Solutions

While the 3PL industry faces multiple challenges, solutions to these issues exist. In fact, simply changing the storage methods or equipment used in a facility can improve efficiency and productivity. With a more productive facility, providers can get more from the labor they currently have and make better use of their existing warehouse space.

1. Wire Containers for Faster Picking

While some small pieces may remain in cardboard boxes for picking, putting larger inventory items inside bulk collapsible wire containers is a better option. The containers take up little space after collapsing them for storage. They also offer a stronger alternative to cardboard boxes. Plus, the wire construction allows for workers to quickly see the contents of the bins.

Additionally, vertically stacking wire mesh containers helps you use the storage space overhead more. These units can stack up to four units high and have capacities of up to 4,000 pounds per bin. Therefore, a stack of four could hold up to 16,000 pounds of products within the floor space of one unit.

2. Full-Power Pallet Stackers to Reach New Heights

If you want to increase the vertical storage in your warehouse, you need equipment that allows your workers to safely stack pallets that high. Full-power pallet stackers permit better control over heavy loads, such as full pallets of products that your workers need to move around the facility.

Additionally, since these stackers operate with electrical power instead of diesel, they are quiet during operation, increasing safety and allowing workers to communicate with each other in the facility. Plus, electric pallet stackers do not emit harmful fumes.

Some models of full-power pallet stackers can lift up to 2,200 pounds a maximum of 150 inches from the floor. Integrating these stackers into your facility can speed up moving loaded pallets, making your facility operate more smoothly and efficiently.

3. Stackable Pallets to Reduce Storage Space

Storage solutions may change in how often you use them based on seasonal demands in your facility. Therefore, you should have some storage options that don’t take up much space when not in use. Stackable plastic pallets are one solution to the need for additional storage without taking up extra space between uses. Using these pallets keeps your facility organized and ready for sudden increases in storage needs, which boosts space efficiency.

4. 5S Visual Aids to Improve Productivity

If you want to use 5S as a way to stay organized and improve your facility’s efficiency, visual aids can remind workers of the practice. Visual aids for 5S can include both tool shadow tape and floor signs.

With tool shadow tape, you can cut shapes from the tape to match cleaning supplies and tools. Add the tape where the equipment should go to serve as a reminder of how to keep your facility organized. Plus, workers can quickly see which supplies are missing or currently in use.

Floor signs boost safety by providing information about where workers or drivers can go in your facility. These signs streamline movement, thereby improving the flow of workers and vehicles throughout your facility.

5. Pallet Racking and Decking to Optimize Use of Space

To optimize your space, think about more than the two-dimensional floor space that you have in your warehouse. Consider how much added space you can gain from vertical storage. With pallet racking and decking, you can store products off the floor. Use these storage solutions to your advantage by keeping slow-moving products higher and fast-movers lower. By appropriately using these options, you can reduce the effort your workers need to put into order retrieval.

Benefits of Increased Warehouse Efficiency

By using these 3PL productivity tips and improving your warehouse efficiency, your business will enjoy multiple benefits. Boosting productivity will make your time, money and learning investments worthwhile.

1. Increased Customer Retention

The businesses that use your warehouse for the distribution of their products to stores or e-commerce customers expect excellent customer service. In fact, 62% of shippers who use 3PL providers indicated that poor customer service is the main reason for a failed relationship. When you provide better efficiency, you can meet your customers’ needs and offer better service, thereby retaining more of them.

2. Improved Operations

Operations in your facility improve when you have a more efficient warehouse. For instance, your workers waste less time and get more done. You can also ship more products and store more goods. More efficiency means fewer errors and delays.

3. Reduced Staffing Needs

When staff members work in a well-organized warehouse, they can get their jobs done faster and with less physical effort. You may not need to hire additional labor if your existing staff can improve their productivity. You may need to provide additional training, especially if you change policies or reorganize your warehouse. This training will help your workers be as productive as possible, saving you money, time and effort finding and educating new hires.

4. Better Flexibility

With a more efficient warehouse, you can be more flexible to meet your customers’ needs. For instance, if they have seasonal changes in their inventory and fulfillment, your well-organized operations can meet those needs more easily. You may have seasonal products stored on higher pallet racks that you need to move down to lower racks for faster retrieval. However, after such a simple move, your facility will be prepared to meet the new demand for seasonal goods.

5. Greater Resiliency

A 3PL provider that meets customers’ needs by being flexible and offering great customer service will be more resilient. As the industry grows, demand will increase. However, your facility needs to have the ability to change with the increased need for it. By making your warehouse more productive, you can continue to offer 3PL services for your customers now and into the future.

Find Solutions for How to Enhance Your Warehouse Productivity at Cherry’s Material Handling

For more than 35 years, Cherry’s Material Handling has helped warehouses to become safer, better organized and more productive. We continue to offer solutions for warehouse challenges for 3PLs and many others. Find the products you need to increase your warehouse’s efficiency here at Cherry’s Material HandlingReach out to our team to discuss your needs and learn equipment that can improve your warehouse operations. 

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