Understanding Third Party Logistics (3PL) Warehouse Services – Part 2

Receiving and Put Away

Inbound inventory can be received by the 3PL from a variety of sources but typically it will come from a local supplier or in the case of imported goods, it will normally be delivered by a carrier that has been arranged by the international freight forwarder or customs broker.

Depending on the size of the shipment the goods will arrive as loose cartons, on pallets or in a shipping container. The 3PL will unload the cartons or pallets from the carrier, check the goods off against a packing list that has been supplied prior to the arrival of the goods or has been delivered with the goods. In the case of a shipping container, the 3PL will unpack the container and then undertake the checking process.

The purpose of the checking process is to ensure that was has physically been received match the expected type and quantity shown on the packing list and what is expected to be received by the client. These quantities are then usually entered into the 3PL’s warehouse management system (WMS) to create a record of what is being stored at the 3PL site and what inventory the client has available to fulfil a customer order. More sophisticated warehouse management systems (WMS) will also keep a record of where the inventory is physically located within the warehouse. This helps to streamline the order picking process.

Once all inbound inventory has been accounted for and entered into the 3PL’s warehouse management system (WMS) it will be physically moved to a storage location within the warehouse and will become available to fulfill customer orders. This process is commonly referred to as the “put away” process.

From a cost perspective the 3PL will normally try to recoup the costs associated with the physical handling of the inventory and the systems processing requirements of the inbound shipment.

As a result the rate schedule for receiving and put away activities will typically include a handling cost relevant to the type of unit being received e.g. per carton, per pallet or per shipping container and a processing cost per inbound order and a unit handing cost relevant to the type of unit being put away e.g. per stock keeping unit (SKU) / carton or per pallet.

Both charges are usually based on the labour cost and any materials associated with performing the relevant activities associated with the receiving and put away process.

Below is an example of a schedule of rates for the receiving and put away process.

The storage and order fulfillment functions and examples of associated costs will be discussed in subsequent posts.

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Similar Posts

1. Understanding International Freight Forwarding Costs

2. Understanding Customs Clearance Costs

3. Understanding Transportation Services and Costs

4. Understanding Warehouse Services and Costs – Part 1

5. Understanding Warehouse Services and Costs – Part 3

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