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Logistics Service Provider Industry ( LSP Industry).

Hello Experts,

Recently, I come across some interesting and also challenging requirements for customers who are mainly into 3PL Service Providers. With my personal experience, I am going to narrate the quite few requirements that need to be fulfilled by any ERP and Warehouse Management product in the market to address the requirements of the 3PL Industry.

Please note, that these are not for any individual customer, I am addressing the industry needs, keeping the following in mind. 

Future expansion of business like — Easy to On-Board New Tenants.

Transparency in Stocks & Financial Reporting — For every Tenant Customer. 

Efficiency in Warehouse Operations  — Easy adoption of each process step for the individual tenant. 

I am below with SAP S4 HANA Logistics and FI Modules within the Standard SAP Best Practices itself.

There could be different ways to address the individual requirements, but I am looking at the overall solution to meet all the requirements of the entire supply chain. Please write your comments and suggestions with the requirement number mentioned below.

 

Deployment Options: 

I would advise the decentralized model for the Logistics Service Providers business for the following reasons:

  1. Can be able to Integrate Inbound and Outbound deliveries multiple Tenant Client’s – SAP / Non SAP ERP systems.
  2. Can be able to provide two service offerings to customers
    1.  Only Warehouse services – connecting to their ERP systems and integrating only deliveries.
    2. ERP ( Finance and Logistics) and also Warehouse services — e.g Connecting their Web shops to Our SAP ERP or offering Fiori for Order management.
  3. Can be able to handle many volumes and system load.

Understanding the Roles possible in Extended Warehouse Management:

 

Industry Requirement

1 Multiple Tenants ( Customers) sharing the same physical warehouse. 
2 Every Material to be identifiable by  SKU / Quant level for each customer.
3 Separate Stock Reports for Each Tenant(Customer).
4 Separate Warehouse Billing for each Tenant based on the agreed contracting price.
5 Separate Picking  & Put away Strategies for each Tenant Customer.
6 Should be able to perform separate Kitting, VAS, Packing Steps for each Tenant Customer.
7 Flexibility in the system either to integrate with their existing ERP and perform only Warehouse management Operations.
8 Flexibility in the system to perform end to end supply chain process by a 3PL provider.
9 Flexibility to integrate with multiple Sales and Return channels like their own web interfaces like Portals, s, Integrate with 3rd party sales channels like Amazon or eBay, or Call centre order management, B2B Integration, B2C Integration etc.
10 Separate Balance sheets for each Tenant customer in case the End to End Supply chain is managed
11 3PL should be supporting in managing the subcontracting process defined by Tenant Customer.
12 Support Tenant Customer in choosing the effective Shipment and Delivery prioritization.
13 Make the best use of available warehouse space between multiple tenants.
14 Effective use of shared services like work centres and Warehouse Resources ( Men, Material, and Machines ) among Multiple Tenants
15 Able to handle advanced return management with quality inspection.
16 Able to generate the report for the number of pallet positions per days or Tonnage Report / Day or Activities performed per day etc.
17 The new Tenant onboarding process should be modelled such that the receiving stock and integration with their existing SAP or Non SAP System or even with their FI system.
18 Tenants Customer and Vendor Management, including generation of End Customer Billing, Collecting Cash or Integrating with customer payments and posting to the Tenant Customer FI Accounting Systems.

 

 

 

2 Comments
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  • This is a very interesting and thought-provoking article.  Would you say that your list of Industry Requirements is also a good customer checklist to confirm capabilities of potential 3PL providers?