What is Fourth Party Logistics?
Mar. 22, 2023
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The fourth party logistics is a supply chain integrator, which is the leading force of the supply and demand sides and the third party logistics. It provides a complete set of supply chain solutions through its information technology, integration capabilities and other resources to obtain certain profits.
What are 4PL components?
According to Accenture's definition, 4PL has four key components: architect/integrator, control room, supply chain information intermediary and resource provider.
Considering the development of the 4PL concept over time, the initial 4 elements of the 4PL definition can be reduced to 3. Both the integrator and control room elements in the original definition can be mapped togeneral levels related to managing relationships, designing the entire supply chain, and ensuring that standards and compatibility exist.
Characteristics of the fourth party logistics
Compared with third-party logistics focusing on practical operations, fourth-party logistics pays more attention to the logistics activities of the entire supply chain. This difference is mainly reflected in the following three aspects, and forms the unique characteristics of fourth-party logistics:
4PL provides a complete set of supply chain solutions. After detailed analysis of the entire system of the supply chain or industry logistics where the enterprise customer is located, a solution with mesoscopic guiding significance is proposed. The fourth-party logistics service provider itself cannot complete this plan alone, but needs the assistance of various companies such as logistics companies and technology companies to implement the plan.
4PL adds value through its ability to impact the entire supply chain. Fourth-party logistics service providers can make the flow of the entire logistics system more reasonable and efficient through process reengineering of logistics operations, thereby balancing the benefits generated between all links in the supply chain, so that the enterprise customers of each link can benefit.
To become a fourth-party logistics company, it needs to have certain conditions, such as the ability to formulate supply chain strategy, design business process reengineering, technology integration and human resource management capabilities; Leading position in integrated supply chain technology and outsourcing capability, and has a strong professional personnel; Able to manage multiple different suppliers and have good management and organizational skills
The Main Differences between 4PL and 3PL
The differences between 3PLs and 4PLs may seem small, but for companies looking for the right service and support to support their growing business, the difference can be huge.
3PL focuses on straightening out daily logistics operations, while 4PL handles the entire supply chain including logistics.
4PL providers are more suitable for large and medium-sized enterprises, while 3PL providers are more suitable for small and medium-sized enterprises.
3PL mainly focuses on one-time transactions, while 4PL is the highest level of logistics services for enterprises.
4PL companies manage many resources, suppliers, and even 3PL suppliers to extend the best support for supply chain management.
A 4PL company may be the sole owner of several vehicles, shipping containers and warehouses in different locations. On the other hand, 3PL companies usually do not own such assets.
3PL companies provide services and support for a certain intelligent area, but generally do not provide strategic insight and management in the entire supply chain.
The 4PL method for supply chain management provides a single point of contact for the entire supply chain, whereas with 3PL suppliers, businesses often need to manage some aspects of the supply process internally.
Overall, a reliable 4PL partner can add a lot of value to an organization's logistics processes and supply chain performance. eTower mainly serves 3PL/4PL and cross-border e-commerce companies with supply chain management needs. If you want to know more about 4PL, please contact eTower!
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