Both 3PLs and 4PLs are professional hired services that assist corporations like yours in planning and executing inventory management and order fulfillment logistics. You have considerably more freedom than if you were to handle fulfillment in-house.
A third-party logistics provider is a firm that manages your company’s supply chain and order fulfillment procedures. The 3PL may handle everything from storing and managing your inventory to picking, packing, and shipping your orders, depending on how much control you want to give them. They can even take care of the return process for you.
So, what exactly is a fourth-party logistics (4PL) company and how does it differ from a 3PL?
A fourth-party logistics provider adds another component to the mix, combining different resources and technologies to improve your supply chain’s design and execution. You can still employ your 3PL to handle the day-to-day aspects of order fulfillment, but a 4PL will take on the role of “control tower” for supply chain management. They’ll keep an eye on your 3PLs and any other resources or providers you employ to ensure that your supply chain runs smoothly, efficiently, and economically. A 4PL service may be a fantastic way for companies that want comprehensive supply chain data.
The primary distinction between a 4PL and a 3PL is that many are asset-based, owning or leasing equipment and facilities in order to offer services. As a result, a 3PL is concerned with its costs and may not always seek out the best deal for you if it means a greater bargain for them. In contrast, a 4PL’s primary goal is to bring your supply chain together and improve it.
The Different Types of 3PL Providers
A third-party logistics company may provide a variety of services, although many specialize in certain supply chain solutions. This might imply using numerous 3PLs to fulfill your supply chain’s various elements as a firm – when employing a 4PL, this can be useful.
Here’s a short summary of the many types you may encounter:
3PL Transportation
A 3PL that specializes in transportation of goods between sites is known as a freight forwarder. When selecting a transportation company, you’ll have to think about several things, including the firm’s location, your clients’ locations, delivery deadlines, shipping methods and costs.
3PL Warehousing/Distribution
Warehouse and distribution-based 3PLs are the most prevalent. These firms handle the storage, shipment, and returns of your purchases. When looking for a 3PL, think about the number of locations and their geographical locations, storage pricing plans, shipping agreements, insurance coverage for delivery, daily order fulfillment cutoffs, and management tools.
Financial/Information
When your firm has crossed the $8 million or $9 million annual revenue barrier, you may need a financial 3PL to assist you optimize your operations for the market and assess contemporary trends. Freight auditing, cost accounting, bookkeeping, tracking, tracing, and inventory management are just a few of the services offered by these 3PLs.