Know About Fourth Party Logistics

Arrangement in which a firm contracts out its logistical operations to two or more specialist firms such as third party logistics that hires another specialist firm that is fourth party to coordinate the activities of the third parties.

Assuming  a holistic strategy fourth party logistics (4PL) has became as a breakthrough supply chain solution broadly integrating the competencies of third party logistics (3PL) providers, leading edge consulting firms and technology providers. Such strategic alliances leverage the skill sets, strategies, technology and global reach, which would have otherwise taken years to duplicate.

In order to act as a truly effective fourth party logistics provider, the consultant must not have any operational capacity as this would lead to the possibility of a bias towards the provision of services. As such, this means that many companies which claim to provide 4PL services are in effect 3PL providers offering consultancy services, rather than true fourth party logistics providers.

Whilst the specific services of a fourth party logistics provider will vary between providers. In general, fourth party logistics providers have two main functions. In the first instance, 4PL services focus on a consultative approach of analyzing the supply chain and then making recommendations for improvements. The second function relates to management within the supply chain itself, the fourth party logistics company often acting as a manager of numerous smaller third party logistics companies.

Know About Third Party Logistics

Modern business people are always think about the ways to save money, while also maintaining good quality products and services. Also most of the companies, in an attempt to save their money are outsourcing anything they can to other companies. For instance, a third party logistics firm could help a business that is unfamiliar with the city find a public warehouse for their products they may want to ship to the area.

Third party logistics has different strengths and weaknesses. They all target various aspects of the transportation world. Thirds party logistics can be classified into four types. They include:

  • Standard third party logistics that provides most basic activities like warehousing, pick and pack, distribution, etc
  • Service developers that are based on strong IT infrastructure and they provide many value added services like cross docking, unique security system, or specific packaging
  • Customer adapters which care of all the company’s logistic activities on client’s request but they do not develop or change any activity or process
  • Last one is customer developers that take complete control of the company’s logistic functions.

Third party logistic services or application are mainly needed for firms which may be too big or have a wide complex network. Therefore, logistics does not need to be the main focus or competency of many firms.

Third party logistics have several advantages to a business in many ways. A business can focus on various aspects rather than the logistics thus strengthening its core competencies. Also third party logistics costs lesser and they offer more specialized logistic process and functions.

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