Many people find weighing in on the 3PL vs 4PL debate tough and confusing. What are these terms? And which option is best for you? It is reasonable to spend a lot of time thinking about this choice.
Essentially, a 3PL company manages the transportation and logistics aspects of a company’s operations, whereas a 4PL firm oversees the activities of the various 3PLs that the company works with. It is up to a company to decide whether a 3PL or a 4PL is more suitable. We give a comprehensive overview of both in this post.
Third Party Logistics companies manage outsourced transportation and logistics operations for a client firm.
What services are provided by a 3PL company?
These companies provide outsourced transportation and logistics services, but the client corporation always maintains control. Many 3PLs offer a variety of services in addition to outsourced transportation and logistics operations. The level and variety of services provided by 3PLs vary. The level of outsourcing may vary depending on the client’s needs and the services provided by the 3PL. Many 3PLs are asset-based and directly manage some or all of the resources used to perform the services.
Businesses can benefit from external transportation expertise by outsourcing at each phase of the logistics process. By outsourcing the right things and doing the right things in-house, businesses can strengthen their operations.
3PL companies generally manage:
- Fulfillment Services
- Warehousing/ Inventory Management
When working with a 4PL company, the client doesn’t handle the outsourced functions as much as with a 3PL. Instead, the 4PL firm manages the logistics provider. To be able to oversee transportation and logistics operations, the client may hire a 4PL firm. A 4PL firm may be used when the client doesn’t have an employee on staff that handles logistics and transportation. Therefore, the 4PL company must have a thorough knowledge of the client’s business operations and inner workings. The logistics needs, along with oversight and management, are taken care of by the 4PL firm. It requires a thorough understanding of the business’s activities and how it operates in order to properly handle logistics. Without that, problems and confusions are sure to arise.
The client may choose a 4PL to manage the enterprise’s entire supply chain. A well-run 4PL can offer valuable insight that the client can benefit from. Outsourcing your entire logistics operation to a 4PL is what it’s all about. We’ll discuss the advantages and disadvantages of both options later, so you can decide which is best for your enterprise.
Choosing a 3PL company provides numerous advantages. They can help businesses save money on transportation and logistics by providing the expertise required for top performance. Businesses can also save money, which is obviously crucial. In addition to providing strategic insights and enhancing customer service, 3PLs can assist you with developing a more responsive supply chain model if you desire.
How does 4PL work?
Fourth party logistics (4PL) solutions entail contracting out all logistical tasks and supply chain management to a logistics business. 4PL firms behave more like trusted consultants, providing a complete picture of the supply chain at all times. This enables 4PL firms to deliver information, recommendations, and strategic value-added services depending on your company’s objectives.
A 4PL company can offer the following services:
- Kitting, Bundling, Packaging and Drop shipping
- Logistics Strategy
- Sourcing/Fulfillment of Freight Strategy
- Inventory Planning & Management Support
- Management of Inbound, Outbound, and Reverse Logistics
3PL firms offer the following advantages:
1. Improved transportation and logistics
2. Cost savings
3. Strategic insights
4. Faster delivery
5. A more responsive supply chain structure
6. Customer satisfaction
ProConnect Integrated Logistics for your Business
You’re not the only one thinking of outsourcing part of your operations to a 3PL, many companies and shippers agree and rely on us to efficiently support them. Optimizing supply chain is not easy, it requires tying lots of activities and ends together, opting for an experienced 3PL like ProConnect Integrated Logistics can offer many benefits – thanks to their expertise, experience, resources and of course, their network, which can reduce your supply chain risks marginally. You may or may not have a supply chain department of your own, but you still need a trusted team to identify and avoid potential risks and problems that can affect your supply chain operations. Therefore, a 3PL is often turned to and appointed by large companies as well as SMBs.
For any questions or evaluation, get in touch with us.