If you’ve been shopping for a fulfillment center or other type of 3rd party logistics company lately, you may be coming across the term “4PL.”
Probably not surprisingly, 4PLs are born of 3PLs, but they take their jobs a bit further. Instead of stopping at order fulfillment and compartmentalizing the different parts of the supply chain, a 4PL pulls it all together.
4PLs are popping up as the need for more data, more transparency and more control over the supply chain have reached a tipping point. In many cases, these 4PLs aren’t new companies, they’re simply 3PLs that have learned a few new tricks.
3PLs and 4PLs: Signs of Evolving Supply Chains
Where the 3PL handles transportation, warehousing and distribution, the 4PL goes beyond those basic services.
Often considered an enhanced 3PL, the 4PL has greater capabilities than a 3PL. Sometimes this happens naturally as a 3PL expands into areas like reverse logistics and greater management of the supply chain.
Are 3PLs Outdated?
No, of course not.
Some customers want and need an affordable shipping and warehousing solution like what a 3rd party logistics company can provide. Even if you believe that you’re working with a 3PL, you may discover that they have recently acquired another 3PL with different capabilities, effectively turning themselves into a 4PL by acquisition.
If you are looking to make the switch to a 4PL, make sure that you choose your new supply chain partner carefully. Find out what it is that potentials do that make them enhanced 3PLs and really weigh the different competencies each brings to the table versus the additional cost that can be involved. You may find that your 3PL is still really all you need.