The four-party logistics services called “4PL” is one of the most effective strategies, which provides its users with many operational and financial efficiencies, thus helping the companies that deal with them in reducing their costs, in addition to improving the performance of the supply chain. For logistics services to help improve the performance of companies, and in this article on diggipacks we will show you 3 reasons your business should consider using a 4PL.
What is 4PL?
It is one of the logistical models through which a company or a specific organization uses an external resource to manage its own logistics activities, as well as implementation processes across the supply chain, and 4PL logistics providers can provide more strategic management across the company’s supply chain.
What online retailers need to know about 4PLs?
Fourth-party logistics 4PL is one of the logistics services responsible for managing the entire supply chain, which also includes all legal aspects and decision-making processes.
When you hire a 4PL provider, you sign a contract with him to manage your supply chain, who will use his own resources to meet all of your supply chain needs.
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Reasons your business should consider using a 4PL
There are many organizations that lack the technical infrastructure to manage transportation operations efficiently and effectively, and there are many reasons that make you use 4PL logistics and the following are the top 3 reasons:
- Continuous improvement
Perhaps the most prominent characteristic of 4PL is that it works to enhance its creativity, which provides long-term value to its users, and which results in significant progress in a performance that continues to improve, so 4PL provides multiple services and solutions that help in improving transportation operations at the lowest possible costs.
- Access to an integrated technology platform
4PL Logistics is able to access an integrated technology platform, which focuses on the operational and financial aspects of a business, not on the transportation and logistics functions.
- Access to the most qualified professional team in the supply chain
Fourth-party logistics helps (4PLs) to reach the most efficient professional team expert in the supply chain, and perhaps the most important thing in this regard is that this team consists of highly experienced logistics professionals, from the average employee to the CEO, so when you accept to use 4PL you acquire an integrated team of supply chain professionals.
What is 3PL?
It is one of the logistical models through which a company or a specific institution uses an external source to carry out transportation and logistical services, while the company maintains administrative supervision.
How does 3PL work?
3PL helps you receive your products, then process them, and store them as well as ship them, all under your company name, and although it carries out warehousing, selection, packaging, and a little inventory management, in the end, the management role is in your hands.
Differences between 3PL and 4PL providers
There are many different levels of logistics, which create a lot of confusion among e-commerce retailers, which makes them not know what provider to use, and here are the most prominent differences between 4PL and 3PL:
- 4PL is more suitable for medium and large companies, while 3PL is more suitable for small companies.
- The 4PL jobs focus on the improvement and integration of the company and the 3PL jobs focus more on the day-to-day operations within the company.
- 4PL providers own trucks and warehouses while 3PL does not provide that to its users.
- The level of services provided in 4PL is higher, which provides more value to its users, while 3PL focuses on daily transactions, so the value provided is not the same as 4PL services.
- 4PL handles your entire supply chain, while 3PL handles inventory and minor daily shipments.
- 3PL service providers will handle the storage and transportation of your inventory, but you have administrative control, while the 4PL service providers will handle every aspect of your supply chain.
- You have complete management control when you use 3PL whereas when you use 4PL services you are leaving them the way in which the work will be done and which will ultimately achieve your corporate goals.