Fourth Party Logistic Model (4PL)
Third-party logistics services (3PL) as well as fourth-party logistics services (4PL) have a fundamental role in the supply chain, and there are differences between fourth-party logistics service providers (4PL) and third-party logistics service providers (3PL). Fourth-party logistics services (4PL) have greater responsibilities and thus help in a deeper and greater way to achieve customer goals, and in this article on LOGTIAT logistics solutions we will show you all what you want to know about third-party logistics (3PL) as well as from fourth party logistics (4PL).
What is a 4PL?
It is one of the types of logistics services, and they are external sources for organizing and managing the supply chain of individuals, so the owners of factories and companies use those external sources, and they are the professionals to get a better management.
What do 4PL providers offer?
Perhaps the most prominent characteristic of the services they provide is their high level of control and accountability to a large extent; through them you will be able to obtain the highest level of effective management of your supply chain.
Once the fourth-party logistics service providers (4PL) are hired, they will then take control of all operations related to packaging, warehousing, etc., allowing the owners of these companies to control other aspects of their business, and the most prominent of their services are:
- • Shipping sourcing strategies.
- • Business planning.
- • Project management.
- • Logistics services.
- • Analysis of transportation expenses.
- • Carrier performance analysis.
- • Manage inbound, outbound and reverse logistics services.
- • Coordinating a broad base of suppliers
- • Capacity utilization analysis.
- • Inventory planning and management.
Advantages of 4PL
Here are the most prominent features that 4PL can provide to you
1. Manage your operations more broadly
One of the main advantages of 4PL services is the expansive management of your operations, as all shipping, distribution as well as warehousing is better handled.
2. Take advantage of information technology
As 4PL services depend on modern technology and software, along with automated systems that improve your communication and increase visibility in real time, as well as provide a lot of information.
3. Offer an endless number of solutions
4PL services are characterized by having a sweet-oriented approach, through the interest of service providers to design the solution first in order to meet the business requirements, and they have significant experience in managing the operations of shipping and distribution, and they provide a large number of IT-based solutions.
Disadvantages of 4PL
Despite the huge advantages offered by 4PL services, there are a number of disadvantages, which are:
- • Reduced ability to control implementation processes as service providers handle the bulk of implementation and logistics operations.
- • Relatively high cost, especially for small and emerging companies.
What is a 3PL?
They act as intermediaries between manufacturers and retailers. 3PL providers also offer a number of logistics services similar to those provided by 4PL, but the main difference is that they allow you to manage business in a greater proportion than others. Third-party logistics services do not oversee the entire supply chain management and organization processes.
Difference between 3pl and 4pl
The most prominent difference between 4PL services and 3PL services is that the first deals with the entire supply chain, and the second deals only with the logistical process, and here are a number of differences that highlight the difference between 3PL and 4PL services:
- • 4PL services are the most suitable form for large and medium companies, while 3PL services are more suitable for small and emerging companies.
- • The 4PL functions focus on the improvement and integration of the entire organization, while the 3PL functions are completely focused on the day to day operations of the company.
- • 4PL service providers provide a number of assets, trucks and warehouses as well, unlike 3PL who do not.
- • 3PL services focus on one-time transactions only. 4PL services are the complete opposite, as they seek to obtain great value through effective coordination of all activities.
Which one is right for your company 3pl or 4pl?
The process of determining which type of services is most suitable for you depends on the type and size of your business itself, so we find that if you own a small or medium-sized company, 3PL services are the most suitable option for you, which will give you greater advantages and will suit your budget greatly.
As for if you are a large company owner, 4PL services will be more suitable for you, especially if you are looking to expand the range of services in your organization, as they will help you in that better than 3PL services.