What is 3PL Software? Fundamentals & Glossary

Managing supply chains has never been more complex. Businesses today juggle multiple sales channels, global shipping partners, and rising customer expectations for fast, transparent delivery. For many companies, outsourcing logistics to a third party logistics software​ provider is the only way to stay competitive. But outsourcing alone isn’t enough  you need technology to tie it all together.

That’s where 3PL software comes in.

Third-Party Logistics (3PL) Software Definition

At its simplest, 3PL software is the technology platform that enables a third-party logistics (3PL) provider to manage and deliver outsourced logistics services for a client.

• A 3PL provider is a company that handles logistics functions on behalf of other businesses  for example, warehousing, order fulfillment, and shipping.

  
  

• 3PL software is the digital system that supports those operations: tracking inventory, orchestrating shipments, and keeping data flowing between client, warehouse, and carrier.

  
  

Think of it as the control tower of outsourced logistics. While a warehouse management system (WMS) or transportation management system (TMS) focuses on narrow functions, 3PL software spans multiple domains to give both the provider and the client visibility into the whole process.

Why Businesses Use 3PL Software

For an operations manager or product leader, the appeal of 3PL software is tied to modern pressures:

• Growing supply chain complexity: Even mid-sized brands often ship internationally, work with multiple carriers, and sell across marketplaces like Amazon, Shopify, and wholesale distributors.

  
  

• Cost control and efficiency: Manual coordination is error-prone and expensive. Software standardizes workflows, reducing mis-shipments and chargebacks.

  
  

• Visibility and customer expectations: Shoppers expect real-time tracking. Without a digital platform, brands risk losing trust.

  
  

• Scalability: As businesses expand into new geographies, a software layer allows them to add warehouses, carriers, and SKUs without rebuilding processes.

Core Functions of 3PL Software

While each platform is different, most modern 3PL systems cover these essentials:

1. Warehouse management — Receiving, put-away, picking, packing, and returns processing.

   
   

2. Transportation management — Carrier selection, shipment scheduling, route optimization.

   
   

3. Order management — Consolidating orders from multiple sales channels.

   
   

4. Inventory tracking — Real-time stock visibility across locations.

   
   

5. Billing and invoicing — Freight audit, automated billing, and settlement between provider and client.

   
   

These are the non-negotiables. Without them, a logistics provider can’t operate at scale or meet modern service-level agreements.

Modern Capabilities (2025 and Beyond)

Every six months, the capabilities of leading platforms expand. Some of the newer features shaping the industry include:

• Real-time tracking: GPS-enabled updates from first mile through last mile.

  
  

• Automated billing engines: Transparent freight audits, customizable tariffs, and instant settlements.

  
  

• API integrations: Out-of-the-box connectors with Shopify, WooCommerce, NetSuite, and other ERP systems.

  
  

• Micro-fulfillment support: Managing smaller, urban fulfillment centers closer to customers.

  
  

• Predictive analytics: Machine-learning forecasts of demand, labor needs, and shipping delays.

  
  

For product managers evaluating solutions, these features can be the difference between a short-term fix and a scalable platform.

How 3PL Software Differs From WMS & TMS

Because logistics terms often overlap, it’s important to clarify distinctions:

System	Focus Area	Typical User	Scope
WMS (Warehouse Management System)	Managing operations inside a single warehouse	Warehouse managers	Narrow, facility-level
TMS (Transportation Management System)	Planning and optimizing freight movement	Transportation/logistics teams	Narrow, outbound focus
3PL Software	Orchestrating outsourced logistics across warehouses, carriers, and clients	3PL providers, operations managers, clients	Broad, end-to-end visibility

In short: WMS and TMS are building blocks, while 3PL software is the umbrella system that integrates them into a seamless service.

Decision Criteria for Evaluating 3PL Software

When shortlisting providers, managers often weigh:

• Scalability: Can it support new geographies, SKUs, or sales channels without major reconfiguration?

  
  

• Integration: Does it connect to existing ERP, CRM, or e-commerce platforms?

  
  

• Reporting & analytics: Are dashboards customizable? Can you drill into carrier performance, order accuracy, and cost per shipment?

  
  

• Compliance & international capabilities: Does it handle customs paperwork, tariffs, and multi-currency billing?

  
  

• Support & vendor ecosystem: Beyond the software, what training, documentation, and partner network does the vendor provide?

Challenges & Considerations

Adopting a 3PL system is not without hurdles:

• Data security: Sensitive shipment and customer data must be protected under standards like GDPR or SOC 2.

  
  

• Change management: Teams need training to trust and use the new workflows.

  
  

• Cost transparency: Pricing can be complex (per order, per location, per feature). Evaluating total cost of ownership is key.

Glossary of 3PL Software Terms

Here are common terms you’ll encounter when researching third-party logistics systems:

• EDI (Electronic Data Interchange): A standard format for exchanging business documents electronically.

  
  

• OMS (Order Management System): A platform that tracks sales orders across channels.

  
  

• Pick & Pack: The warehouse process of selecting items and preparing them for shipment.

  
  

• Freight Audit: The process of verifying freight bills for accuracy before payment.

  
  

• Last-Mile Delivery: The final leg of delivery from distribution hub to customer.

  
  

• Cross-Docking: Moving goods directly from inbound to outbound transportation with minimal storage time.

  
  

• Reverse Logistics: Handling returns, repairs, or recycling of products.

  
  

Conclusion: Building Smarter Outsourcing with 3PL Software

For businesses new to outsourcing logistics, 3PL service providers and 3PL software are the backbone that make outsourcing reliable, transparent, and scalable. It provides the visibility that operations managers need, and the efficiency that customers demand.As the logistics industry evolves, platforms will continue to add capabilities from micro-fulfillment to AI-driven forecasting. That’s why companies should revisit their understanding of 3PL technology every six months to stay competitive.

Outsourcing logistics may start as a cost decision. With the right 3PL software, it becomes a growth strategy.

FAQs: 

1. What is 3PL software?

3PL software is a technology platform that helps third-party logistics providers manage warehousing, order fulfillment, shipping, billing, and integrations with client systems. Think of it as the control tower for outsourced logistics.

2. How is 3PL software different from WMS or TMS?

A WMS manages one warehouse. A TMS manages transportation. 3PL software combines both  giving end-to-end visibility across warehouses, carriers, and client accounts.

3. Who uses 3PL software?

It’s used by 3PL providers, operations managers at growing retailers, CTOs looking for reliable integrations, and sales teams who need quick onboarding and client transparency.

4. Why should a business use 3PL software?

It helps businesses scale faster, reduce fulfillment errors, control costs, provide real-time tracking, and expand into new markets without building everything from scratch.

5. What are the core features of 3PL software?

Key functions include inventory management, order management, warehouse workflows (pick/pack/ship), carrier integration, billing and invoicing, and real-time reporting dashboards.

6. What modern features should I look for in 2025?

Look for predictive analytics, API integrations with Shopify and ERPs, GPS-enabled real-time tracking, automated billing, and support for micro-fulfillment centers.