The role of logistics partners has changed immensely over the years due to globalization and the rapid growth of e-commerce. It is no longer confined to bringing the cargo or consignment from one point to another, but rather encompasses a wide range of functions and features.
Fourth-party logistics, also known as 4PL, has taken logistics to a different dimension, where every aspect of a client’s supply chain is taken care of by the fourth-party logistics provider or 4PL provider. A 4PL provider plays the role of a single point of contact for all types of supply chain and logistics requirements of clients.
Also known as Lead Logistics Providers (LLPs), 4PL organizations, in order to manage the entire supply chain of their clients and provide quality supply chain solutions, often interact with several logistics service providers.
The difference between the third-party and fourth-party logistics is that in third-party logistics, logistics operations of an organization are outsourced to a third-party. But in the fourth-party logistics, organizations not only outsource their logistics tasks but also the management thereof.
So, 4 PL providers are essentially supply chain integrators responsible for assessing, designing, building, and monitoring integrated supply chain solutions for their clients. They assemble and manage not only resources but capabilities and the technology of a business’s supply chain as well.
They supervise transport management, manage and analyse inventory management data, monitor warehousing functions, and coordinate various other operations like packaging, freight forwarding, etc. To manage every aspect of logistics and supply chain of clients, 4PL providers sometimes collaborate with 3PL providers.
The concept of 4PL is gaining popularity due to the growing complexity of the supply chain. This complexity can be attributed to the creation of numerous product options, packaging designs, and logistics arrangements. So, businesses are opting for experienced and reliable 4PL providers that can bring value and an innovative approach to supply chain management.
So, 4PL providers, by taking care of the entire supply chain, helps organizations access a broader base of potential suppliers, enhance market transparency for goods and services, integrate back-end system, reduce cost of procurement, and standardize and automate order placement. 4PL solutions are considered ideal for medium to large sized businesses looking for a complete logistics solution.