How to Integrate Your ERP Software With a 3PL Provider
How does ERP Integration With a 3PL Provider work? Well, first let’s understand what ERP is.
Enterprise resource planning (ERP) is a type of software system that helps organizations automate and manage core business processes. ERP software coordinates the flow of data between a company’s business processes. It provides a single source for operations across the enterprise. It’s capable of linking a company’s financials, supply chain, operations, commerce, reporting, manufacturing, and human resources activities on one platform.
Enterprise resource planning (ERP) is a suite of software programs. Programs developed to work together cohesively to monitor and direct all the main business processes and activities within an enterprise. To put this in layman’s term, this means there is one system that holds all the company’s information.
The goal of implementing such a system is to improve a business’s processes. However, in some situations, an ERP may not functionally cover all of a business’s needs.
This is where a third-party logistics (3PL) provider comes in, as they can help bridge that gap. Connecting your ERP with a vendor’s 3PL system can significantly optimize logistical and remote inventory management.
When ERP and 3PL systems are integrated, the 3PL provider is a true logistical extension of the ERP. It provides them with the ability to control logistical processes almost in real-time. How? The two systems talk to each other 24/7.
With integration, the ERP user sees orders as they are received, picked, staged, shipped, and processed. Also, the 3PL provider can see when purchase orders are sent out, when inventory is to come in, and when sales orders are processed.
Ways to Integrate Your ERP Software With a 3PL Provider
When integrating an ERP with a 3PL provider, various approaches can be taken. However, two methods are considered industry-standard as they work well with common ERP software. Software such as SAP, Oracle, NetSuite, Microsoft Dynamics 365, SAGE, Acumatica, and EPICOR.
ERP Integration With a 3PL Via Electronic Data Interchange
The electronic data interchange (EDI) method was first developed to standardize electronic data exchange between two businesses. With EDI, each document is given a unique, well-defined format. Formats such as EDI 850 (Purchase Order, EDI 940 (Warehouse Shipping Order) or EDI 945 (Warehouse Shipping Advice).
When you use EDI to integrate ERP and 3PL, your EDI documents must be formatted by each corresponding standard. For the layperson, they must talk the same language.
For example, if your eCommerce store receives an order from a client, first your ERP will form a Sales Order. Next, generate a Shipment Request. And then send an EDI 940 (Warehouse Shipping Order) to the 3PL partner’s system.
Based on the EDI 940, the 3PL provider will complete the order’s picking, packing, and shipping processes. Then send back an EDI 945 (Warehouse Shipping Advice) to confirm shipping completion.
This approach facilitates a faster order fulfillment turnaround. It also removes manual data entry on both ends of the communication link. No matter the size of a request or response, immediate data processing is possible.
ERP Integration With a 3PL Via an Application Programming Interface
An application programming interface (API) allows different platforms and programs to interact with each other without specific standards being necessary. Each system has its own distinct set of APIs. Using these APIs for integration makes instantaneous direct communication between two systems via the cloud possible.
As long as both servers are online, document exchange can occur instantaneously. Once the exchange is complete, a back-end systems call is made to your ERP confirming the details of the order to be shipped. Or the request for a shipping order’s status.
Using API integration gives both systems immediate access to one another. This approach prevents the need for a data warehousing provider in the middle. This makes saving on “per document” charges possible.
This method is easy to use since every modern platform or suite of business programs should already have APIs. APIs that are ready and published for the sake of data exchange.
What steps should you take when integrating your ERP software with a 3PL provider?
As you search for the right 3PL provider, it is essential to discuss ERP integration. You need to assess how open they are to integrating their system with your ERP system.
Once you find a 3PL provider that aligns with your needs and integration proposal, the following steps will get the ball rolling so both systems can exchange information:
Outline the services of the 3PL provider
Begin by outlining all the services you expect from your 3PL provider. Services such as receiving, delivering them to a warehouse, storing finished goods, and shipping finished goods to customers.
The complexity of your integration process will depend on how many different services you require. And how complex these requirements are.
Define the shared information
First, define the shared information to be exchanged using your desired list of 3PL services.
For example, your ERP’s PO may trigger the 3PL’s PO for the purchase receipt. Or the 3PL’s receiver post may trigger the ERP’s PO receipt creation, and so on.
Define the integration method
At this stage, it is necessary to discuss which integration method to use with your 3PL provider. They may have a preference for EDI, API, or another standard approach.
Once both agree on the method, an intermediary service called a data warehouse will be required.
How Wills Transfer Limited Can Help You Integrate Your ERP Software With a 3PL Provider
Before you can start thinking about ERP integration, you need to find a reliable 3PL provider. Thus, if you are searching for a 3PL service provider, Wills Transfer Limited can help.
We are a highly reputable 3PL provider with over 75 years of experience in the industry. Experience that we can leverage to help your business succeed.
If you want a strong return on investment, Wills Transfer’s 3PL services are right for you. With our services, your overhead, payroll, benefits, uniforms, and vacation premiums are all reduced. Plus, your in-house logistics and clients are simultaneously taken care of.
For more information about why we are one of the best 3PL service providers in Perth, or to learn more about the extensive list of services we have to offer, call Wills Transfer Limited at 613-704-7549 or contact us here.