WHAT IS 4PL OR FOURTH PARTY LOGISTICS

Outsourcing or 4PL Explained

The term fourth-party logistics (4PL) was coined by the Accenture consulting company. 4PLs are logistics outsourcing businesses normally using technology to back their services. 

This 4PL model has shown great growth over the past decade, 4PL’s don’t own the physical asset, they partner with service providers who own the physical assets, such as trucks, ships, planes and warehouses partners.

4PL use to be viewed as consultants, however, that has changed as they now have become the service providers, single point of contact backed an experienced team and technology.

They can be short-term partners who set you up with a 3PL, carriers or other arrangements that you then simply need to keep to for ongoing support.

TIR

A Simple Introduction - Of what people need to know what Fourth Party Logistics (4PL) is?

4PL Manages Complexity

There are many challenges faced by importers, exporters and manufacturers. Since the worldwide lockdown, companies have established that they no longer needed a big in-house team to manage and optimize their logistics process. This is where 4PL companies come into their own. 

In this model, the business outsources the management of the entire supply chain as well as the execution of the logistics activity to a 4PL

Internationally, clients are moving to this model, the pain of change is far less.

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3PL VERSUS 4PL: COMPLEXITY EXPLAINED

According to SEAN MUELLER of Symbia Logistics (https://www.symbia.com/) The Vice President of Business Development, he states what a 3PL is 

WHAT IS 3PL?

If 2PL cedes control of shipping to another vendor, then 3PL takes that idea a step further. With a 3PL model, your company turns over multiple elements of their logistical process to a third party. Those functions can include:

  • Warehousing
  • Pick and pack
  • Order fulfilment
  • Shipping and delivery
  • Freight forwarding

 

Working with a 3PL allows your company to offload tasks that are logistically complex while still keeping you in the loop. With 3PL, your company maintains oversight of your supply chain without shouldering the burden of its execution. 

For example, a typical 3PL partner might take control of your company’s inventory (without taking actual ownership) and store it at their own distribution centre. They might employ shipping efficiency techniques such as cross-docking or kitting to streamline your order fulfilment process. Many 3PL providers have their own physical assets, such as a fleet of shipping vehicles, and will take care of your company’s transportation needs. Most 3PL providers offer services bundled together or à la carte. 

 

He goes on to state 

WHAT IS 4PL?

Understanding what 4PL is can be more difficult because, at its core, 4PL is more abstract. The typical 4PL service encompasses all the logistical considerations found in 3PL, but it adds in elements of supply chain optimization and consultancy. 

It can be difficult to envision how 4PL looks, but it helps to think of it in terms of your supply chain. Whereas 3PL takes control over a single link or a handful of links, 4PL takes custody of the entire chain, including the points where the chain is anchored, resource procurement, and the end-user. 

4PL’s aim is to foster better productivity out of every stage in your supply chain. 4PL includes services such as:

  • Consulting
  • Data and analytics
  • Service coordination
  • Transition planning
  • Sourcing
  • Inventory planning
  • Asset management
  • Overall logistical strategy

The aims of a 4PL provider are broader in their scope because they are focused on shaping the entire structure of your supply chain operations. In other words, 4PL is both programmatic and structural in nature.