Fourth-party logistics, or 4PL, is a business operating model in which the supply chain management and logistics are completely outsourced to one outside service provider. Unlike a third-party logistics (3PL) provider, which oversees part of supply chain operations for a business, a 4PL provider is usually the single point of contact for supply chain management. A 4PL provider has a broader scope of responsibilities that include managing resources, technology, and infrastructure and providing strategic insights and management. A 4PL logistics provider is a company that specializes in managing the logistics and transportation needs of other businesses, offering a wide range of services from supply chain management to warehousing and distribution.
Some key differences between 3PL and 4PL logistics providers include:
- Scope of Responsibility: A 3PL concentrates on logistics, while a 4PL manages the complete supply chain.
- Ownership: A 4PL is a true partner with the customer, while a 3PL is very transactional.
- Control: A 4PL gives its clients a "control tower" view of their supply chains, while a 3PL oversees part of the logistics for a business.
4PL providers can offer some serious efficiencies when it comes to supply chain management, due to their expanded network, connections, and experience of supply chain solutions. However, one of the identifiable disadvantages of using a 4PL for your organization is that you have minimal control over the logistics and fulfillment process for your products. Ultimately, the choice between a 3PL or 4PL depends on the organization.