Fourth-party logistics (4PL) companies significantly influence the supply chain. Not only do they undertake many of the same tasks as third-party logistics (3PL) providers, but they also take on a broader duty in assisting the business customers to attain their objectives.
The critical distinction between a 3PL and a 4PL supplier is responsibility and control. 4PLs are more like trusted advisers, and the client typically depends significantly on their data and services to develop and accomplish their company objectives.
Depending on your company size and goals, one of these choices will be ideal for you. Here’s what you need to know for a closer look at the distinction between these two forms of logistics management.
What Is 4PL?
Fourth-party logistics is a paradigm in which manufacturers outsource both the organization and administration of their supply chain to an external operator. 4PL provides a greater degree of efficient supply chain management to clients, enabling manufacturers to outsource their logistics operations to external specialists for better control.
For example, the production of a product will outsource elements such as logistics, packaging, storage, and delivery of their items to a 4PL firm. A 4PL firm will then assume over these processes so that the manufacturer or retailer may concentrate on other elements of their business.
These services include:
- Freight sourcing tactics
- Analysis of transportation expenditures
- Analysis of carrier performance
- Effective 3PL management
- Business planning
- Project management
- Management of incoming, outbound, and reverse logistics
- Coordination of a vast supplier base
- Network analysis and designs
- Analysis of capacity usage
- Inventory planning and management
What Is 3PL?
Third-party logistics includes a manufacturer supervising their supply chain while outsourcing transportation and logistics activities to a 3PL provider. This approach is similar to 4PL in many aspects.
However, 3PL providers specialize in inventory storage, inventory management, customs brokerage, freight forwarding, contract management, picking and packing, cross-docking, and IT solutions.
Unlike a 4PL, 3PL providers will not control the entire supply chain and organization.
The Main Differences between 4PL and 3PL
The fundamental distinction between a 3PL provider and a 4PL provider is that a 4PL covers the complete supply chain, whereas a 3PL concentrates on logistics. Each one gives its benefits based on your scenario, so knowing what you receive from each supplier will help you make the correct selections for your organization.
Here are some of the significant differences between the two options:
- 4PL services are better for medium-to-large organizations, whereas 3PL suppliers are ideal for small-to-medium firms.
- 4PL suppliers act at the optimization and integration level, whereas 3PL providers concentrate more on everyday operations.
- 4PL firms may possess assets like vehicles and warehouses, whereas 3PL providers usually don’t typically own these assets.
- 4PL firms can successfully coordinate the actions of 3PL suppliers.
- 4PL suppliers give the most significant degree of logistics services great value, while 3PL providers are more focused on one-off transactions.
- 4PL companies maintain a single point of contact for every business’ supply chain, but with 3PL providers, firms typically need to independently handle specific components of the supply process.
Choose Go Freight hub for 3PL or 4PL Services
If you have a start-up or small to medium-sized firm 3PL services would be the best alternative. They will assist you in managing your storage and distribution so you can concentrate on marketing and sales as your firm expands.
However, if you require a more extensive variety of services for your medium to large-sized firm, a 4PL supplier would be more suited to you.
The good news is that Go Freight Hub provides both. They provide 3PL and 4PL services based on what works best for customers. While you receive the logistics help you need, we will also guarantee you earn a return on your investment.