Third Party Logistics in BYD using External Warehouses – An Overview Part 1 of 2
Many medium-sized companies (or even large ones) find it more cost-effective to outsource their shipping and logistics to outside vendors, especially in international countries. It makes a lot of sense with savings in time, money and business experience than the option of investing major dollars in setting up their own warehouses, hiring, etc…
This leads to one of my favorite features in BYD — Third Party Logistics or 3PL.
The business scenario is where the BYD system integrates with the system of an external warehouse provider in outbound deliveries, inbound goods receipts and inventory management. We call this the 3PL provider – who may control multiple warehouses in different countries.
In part 1 of this blog, let’s talk about the outbound section. In BYD, you create sales orders which are tagged to ship from the external 3PL warehouse. These orders then generate into delivery proposals. The proposals are converted to 3PL requests which are sent as XML messages to your 3PL provider. They receive the electronic requests, and ship the goods out to the customer from their warehouse.
Sounds neat, doesn’t it ?
The implementation of 3PL in BYD is essentially an integration project.
BYD provides the Third-Party Logistics work center to manage this.
As part of this integration project, the Third-Party Logistics Integration communication arrangement will be used.
For outbound deliveries, there are 2 web services used – each with its own XML template.
- Outbound Delivery Request (ODER
- Outbound Delivery Confirmation (ODEC)
The 2 web services support the request-response paradigm of 3PL. When a request is sent out to your 3PL vendor to do a delivery of an order, they must send back a confirmation to that request as to items and quantity shipped. If no confirmation is sent back, the ODER is still outstanding and the Sales Order is not completed.
Outbound delivery requests (ODERs) will also include Return to Suppliers and Stock Transfer actions (essentially anything outbound).
Like any integration project, it requires project planning, tight coordination, technical expertise to consume the web services, test case planning and execution to make it a success. There is no coding work on the BYD side. The 3PL vendor will need to be able to consume the BYD web services and its XML payloads – so the programming effort is generally needed on the 3PL vendor systems to be implemented.
My experience in leading the 3PL implementation project at a Silicon Valley company shows that the 3PL feature works quite well in supporting Sales-to-Shipping process at multiple international warehouses.
Next week I will write part 2 of this blog on the inbound side of the 3PL feature.