4PLs vs 3PLs
August 30, 2022
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4PLs
What is a xPL?
To understand the layers or logistics it’s important to visualize what each layer represents.
For the context of quickly understanding the concepts we can imagine Company A that manufactures products that sell both domestically and internationally.
As seen on the illustration, typically the bigger the company gets, the additional layers have to be added for a company to keep up with the demands of having multiple distribution points.
The above holds true for both cases shown in the illustration, for logistics, the more complex or big a customer is, the additional layers that have to be in place to manage the demands in a cost effective manner.
It’s worth mentioning that the layers can be kept within an organization or be outsourced, for example, a company might choose to hire their own logistics manager, director, performance managers and planners to manage freight forwarders and commitments to stores for delivery of products; however, the trend is shifting and more and more companies are realizing the value of outsourcing some or all of these services, while keeping a single party accountable for visibility, KPI performance adherence, on time deliveries, and so on.
4PLs also take on a bigger responsibility in helping the business clients reach their goals...
Difference between a 3PL and 4PL
What Is the Difference between a 3PL and 4PL Provider?
3PL vs 4PLFourth-party logistics (4PL) providers have a huge role within the supply chain. Not only do they assume many of the same roles as third-party logistics (3PL) providers, but they also take on a bigger responsibility in helping the business clients reach their goals.
The main difference between a 3PL vs. 4PL provider is the level of accountability and control. 4PLs are more like trusted advisors and the customer often relies heavily on their data and services to grow and meet their business goals. Depending on your business size and goals, one of these options will be right for you. For a deeper look at the difference between these two types of logistics management, here’s what you need to know.
What is a 4PL?
Fourth-party logistics is a model in which manufacturers outsource both the organization and management of their supply chain to an external provider. 4PL offers a higher level of effective supply chain management to customers, which allows manufacturers to completely outsource their logistics process to external professionals for better management.
For example, the manufacture of a product will outsource aspects such as logistics, packaging, warehousing, and delivery of their products to a 4PL company. A 4PL company will then take control all these operations so that the manufacturer or retailer can focus on other aspects of their business.
Services include: Freight sourcing strategies, Logistics, expense analytics, carrier performance, 3PL management, inbound, outbound, and reverse logistics Management, capacity utilization Analysis, Inventory planning and management, to name a few.
Understanding where your company sits in terms of size and growth potential is critical to make a data based decision on what the best course of action is to achieve the highest possible level of profitability. To learn more about leveraging data for decision making, which is a service we provide in the consultation products we offer, click here to read the blog post about it.
To read the post about advantages and disadvantages of a 4PL and a 3PL click here.
And as always, we’ll be happy to walk you through navigating these topics, we’re one phone call away, and can’t wait to work with you.
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