When you work in the supply chain business, you encounter several different terminologies and acronyms. The amount of information might be intimidating, particularly if you’re new to the sector, have a terrible memory, or have never seen or heard of a particular word before. 3PL is, without a doubt, one of the most famous words among those who work in the supply chain. However, did you know that there is a 4PL? 4PL is a lesser-known phrase connected to 3PL, as you may have gathered from the name. You must first understand what 3PL company is and what 3PL firms do to understand what 4PL is.
What exactly is 3PL?
For the uninitiated, a third-party logistics provider (or 3PL) will provide several logistical services to product firms that need the shipment of products, the fulfillment of orders, and the storage and transportation of items. Another way to put it is that a 3PL functions as a go-between for your company and the carriers who transport your items to consumers. Most third-party logistics (3PL) companies maintain or control their facilities where the seller’s goods are housed and fulfilled.
What exactly is 4PL?
Fourt Party Logistics (often referred to as 4PL in the industry) is a type of logistics in which manufacturers outsource the organization and control of their supply chain and logistics to a single third-party operator.
This partner will be in charge of all aspects of supply chain management, including analyzing, planning, creating, operating, and measuring solutions for the customer, among other things. The single partner oversees the mix of warehouses, shipping firms, freight, and agents on the client’s behalf, and they supervise and maintain the supply chain on their behalf.
DIFFERENCE BETWEEN 3PL AND 4PL?
The primary distinction between a 3PL provider and a 4PL provider is that a 4PL manages the complete supply chain, while a 3PL concentrates only on logistical operations. Each one has its own set of benefits that vary based on your scenario, so knowing what you receive with each supplier can assist you in making the best selections for your business.
Here are some of the most significant distinctions between the two options:
- 4PL providers are more appropriate for medium-to-large organizations, while 3PL suppliers are more appropriate for small-to-medium-sized firms whether be it furniture or custom framings.
- 4PL suppliers operate at the level of optimization and integration, while 3PL providers are more concerned with day-to-day operations.
- 4PL providers may possess assets such as vehicles and warehouses, although 3PL providers do not normally hold these types of assets in their operations.
- To efficiently coordinate the actions of third-party logistics providers, 4PL businesses are required.
- The most significant degree of logistical services at the best possible price is provided by 4PL providers, while 3PL providers are primarily focused on one-time transactions and transactions involving many parties.
- In contrast to 3PL providers, 4PL companies give a single point of contact for each company’s supply chain, while with 3PL providers, firms are sometimes required to handle certain portions of the supply process independently.
Optimization of the supply chain
In contrast to working with a 4PL, a 3PL company allows a merchant to collaborate directly with the 3PL to develop methods to maximize fulfillment. For example, ShipBob is a third-party logistics (3PL) company that works with merchants to determine which fulfillment center locations to use depending on where their consumers are located.
Interactions with customers
Since the 4PL is the merchant’s primary point of contact, all communication is routed via the 4PL and then to the various 3PLs. Because the 4PL serves as a middleman throughout this process, rather than the merchant dealing directly with the 3PL, there may be delays in addressing difficulties in some instances. In addition, because there is no ownership at the 3PL level, this form of customer service may be an unpleasant experience for both the merchant and the client.
With a 3PL partner, you’ll have access to the same customer care staff that you would on your own (in some cases, a dedicated account manager). As a result, problems are fixed more quickly, and you have the opportunity to collaborate with a staff that knows your account.