December 11th in 3PL by .

3PL Vs 4PL

Ever since I started my career in Logistics & Supply Chain Management,  3PL ( Third Party Logistics), 4PL ( Fourth Party Logistics) topics have been debatable. I have read several articles on the same topics, and the moment I decided to blog about this topic. I chatted with to few of SCM professionals, who have almost 20 years of experience in the industry. This article is an attempt to summaries my thoughts, and hope you enjoy reading it.

Third Party Logistics (abbreviated 3PL or …

Ever since I started my career in Logistics & Supply Chain Management,  3PL ( Third Party Logistics), 4PL ( Fourth Party Logistics) topics have been debatable. I have read several articles on the same topics, and the moment I decided to blog about this topic. I chatted with to few of SCM professionals, who have almost 20 years of experience in the industry. This article is an attempt to summaries my thoughts, and hope you enjoy reading it.

Third Party Logistics (abbreviated 3PL or TPL) As the name indicates, TPL’s, are neither a buyer nor a seller, they are just a logistics service providers to buyer/sellers,  basically a facilitator for both the parties. The kind of service that is outsourced to these TPL’s will depend on customer to customer. Majority of the time these TPL’s provide customized service. Some of the functions of  TPL includes, managing all the key links in a client’s supply chain, mainly focusing on transportation, warehousing, freight consolidation, packaging, etc. They also provide value added service like, repackaging, assembling and order fulfillment. These TPLs, owns a good percentage of the fixed assets, plus managing a variety of subcontractors, like Haulier, CHAs, etc. Let me give an example for better understanding the process,  an importer may  request an 3PL to pick up shipment from country A and ship it to country B for assembling multiple parts and components to satisfy client’s conditions. There after to distribute to different parts of the world as an order fulfillment.

Fourth Party Logistics (abbreviated 4PL).  Basically 4PLs  acts effectively as a supply chain consulting company. They focus on a consultative approach of analyzing the supply chain and then making recommendations for improvements. There will be a key focus on extending the range of services offered covering all aspects of the supply chain including procurement, demand forecasting, inventory management etc.

 

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