3rd & 4th party logistics – what ’ s the difference ?
3rd & 4th party logistics – what ’ s the difference ?
Fourth Party Logistics ( 4PL ) is the model of logistics whereby manufacturers outsource the organisation and oversight of their supply chain and logistics to a single external provider .
That provider is responsible for every aspect of supply chain management . The partner controls and manages warehouses , shipping companies , freight and agents .
4PL differs from 3PL in terms of the level of control over assets in the supply chain . In 3PL , there is a higher degree of dedicated assets to an operation . In 4PL , all assets are subcontracted , meaning the business buys capacity on the market as it is required .
This can lead to cost benefits , as the outsourcer does not carry the same fixed costs as operating in a 3PL environment . It also means they are more exposed to the market forces that impact pricing , and with capacity constraints , that could result in .
“ We recommend a single logistics group oversees all aspects of the 4PL solution ”
DAN MYERS , MD , UK & I , XPO LOGISTICS
any meaningful distinction between the two . “ What makes a difference is having a logistics partner that can adapt to the needs of the business ,” he says . “ It ’ s about deploying whatever resources are needed – whether they are those of the company or of subcontract partners . “ Ultimately , it ’ s all about moving goods from where they are to where they are needed , and by when they are required .
In terms of the benefit of outsourcing logistics to a single provider , Myers says this allows a business to receive “ consistent consultancy support and informed decisionmaking from data and outputs in one place ”.