Third Party Logistics (3PL) vs Fourth Party Logistics (4PL)
In the world of logistics, you’ve probably heard the terms “3PL” and “4PL” before. This is due to the fact that they are both relatively new concepts and some people use them interchangeably.
Both are fairly similar and involve outsourcing your logistics requirements to professionals in the industry. But, what is the difference between 3PL and 4PL, and what option is right for you?
What is the difference between 3PL and 4PL?
Essentially, a 3PL (third party logistics) manages outsourced logistics operations and distribution activities for a specific customer. Whereas, a 4PL (fourth party logistics) focuses on managing the entire supply chain.
What is 3PL?
3PL companies outsource your logistics to a third party. A 3PL provides a range of services around order fulfilment - this includes receiving, handling, storing, inventory management and delivering your goods. Many also offer extra services, such as packaging products to your exact specifications or providing last mile delivery with visibility for your customer.
3PL ensures you don’t need to invest in warehouse space, warehousing technology, staff, delivery vehicles and other large expenses. This gives you flexibility with your operations, as you’re able to easily scale up or down to meet fluctuations in demand. 3PL providers can also bring a lot of expertise to the table and can act as a long term partner that delivers more value as your relationship matures.
Importantly, while a 3PL will provide you with a range of logistics services and support, you remain in control and make the decisions on how your supply chain operates.
What is a 4PL?
4PL handles everything that 3PL does, but with an added layer of strategic management.
A 4PL company will manage your supply chain and even make important decisions on strategy and execution on your behalf. Once they understand your business’s objectives and logistics needs, your 4PL will decide the best way to achieve them and then manage the execution of this strategy. This high level of control also brings with it added responsibility, and a 4PL often becomes an integral and invested part of your business.
3PL vs 4PL - Which logistics solution is right for my business?
This will really depend on your situation and logistics needs. Both 3PL and 4PL can save your business time, money and create a more efficient supply chain, but you will need to decide just how much control you’re willing to hand over to a third party.
For many businesses, a 3PL strikes the perfect balance between expert support and maintaining control over your supply chain. They will provide you with the services, support, and advice you need, but you’re very much in the driver’s seat when it comes to strategic decisions.
If your business is struggling with supply chain management and you are comfortable signing control over to another party, a 4PL might be more suited to your needs.
In summary:
· Outsourcing your logistics requirements to a 3PL or 4PL can create a more cost-effective and efficient supply chain for your business.
· While 3PL and 4PL share lots of similarities, they’re very different in one important area – the amount of control they have over your supply chain.
· A 3PL provider can support you with all your logistics and fulfillment needs, offering services that range from transporting and warehousing products, to fulfilling orders and managing inventory.
· A 4PL provides the same services as a 3PL but also takes control of your supply chain. Your 4PL will make strategic decisions about your business and manage your logistics.
· Which is right for your business will depend on your needs and how much control you’re happy to give over to a third party.
In summary:
· Outsourcing your logistics requirements to a 3PL or 4PL can create a more cost-effective and efficient supply chain for your business.
· While 3PL and 4PL share lots of similarities, they’re very different in one important area – the amount of control they have over your supply chain.
· A 3PL provider can support you with all your logistics and fulfillment needs, offering services that range from transporting and warehousing products, to fulfilling orders and managing inventory.
· A 4PL provides the same services as a 3PL but also take control of your supply chain. Your 4PL will make strategic decisions about your business and manage your logistics.
· Which is right for your business will depend on your needs and how much control you’re happy to give over to a third party.
uTenant - 3PL
Decided that 3PL is the right warehousing solution for you? At uTenant, we provide a 3PL matching service, making finding the right 3PL provider simple and easy.