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3pl& 4pl

Former Member
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can any one explain me abt 3pl and 4pl

thanx in adv

Accepted Solutions (1)

Accepted Solutions (1)

Former Member
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A third-party logistics provider (abbreviated 3PL) is a firm that provides outsourced or "third party" logistics services to companies for part or sometimes all of their supply chain management function. Third party logistics providers typically specialize in integrated warehousing and transportation services that can be scaled and customized to customer’s needs based on market conditions and the demands and delivery service requirements for their products and materials.

Types of 3PL providers

• Standard 3PL provider: this is the most basic form of a 3PL provider. They would perform activities such as, pick and pack, warehousing, and distribution (business) – the most basic functions of logistics. For a majority of these firms, the 3PL function is not their main activity.

• Service developer: this type of 3PL provider will offer their customers advanced value-added services such as: tracking and tracing, cross-docking, specific packaging, or providing a unique security system. A solid IT foundation and a focus on economies of scale and scope will enable this type of 3PL provider to perform these types of tasks.

•The customer adapter: this type of 3PL provider comes in at the request of the customer and essentially takes over complete control of the company’s logistics activities. The 3PL provider improves the logistics dramatically, but do not develop a new service. The customer base for this type of 3PL provider is typically quite small.

•The customer developer: this is the highest level that a 3PL provider can attain with respect to its processes and activities. This occurs when the 3PL provider integrates itself with the customer and takes over their entire logistics function. These providers will have few customers, but will perform extensive and detailed tasks for them.

Non Asset-based Logistics Providers

This 3PL performs duties such as quoting, booking, routing, and auditing, but doesn't need to own warehousing facilities, vehicles, aircraft, or any other transportation assets. This type of 3PL may possess only desks, computers, and freight industry expertise.

To be useful, this type of provider must show its customers a benefit in financial and operational terms by leveraging exceptional expertise and ability in the areas of operations, negotiations, and customer service in a way that complements its customers' preexisting physical assets.

<b>4PL</b> is a refinement on the idea of 3PL, a firm that provides outsourced or "third party" logistics services to companies for part or sometimes all of their supply chain management function. A 4PL uses a 3PL to supply service to customers, owning only computer systems and intellectual capital.

A 4PL is an integrator that assembles the resources, capabilities, and technology of its own organization and other organizations to design, build and run comprehensive supply chain solutions." So, what does that mean? Essentially, we function as both an architect and a general contractor, adding value from initial product design through managing production resources, to facilitating distribution

The term 4PL is something that every organization has their own interpretation of and ideas on what exactly a 4PL should offer. To add more complexity to the interpretation, the following groups of service providers actually provide "4PL type" services:

- Consultants

- IT Service Providers

- "E" Marketplaces

- Financial institutions

- Private Organizations

- Logistics Service Providers (traditionally only known for 3PL activities)

A true 4PL organization would then build a set of activities focused around a specific set of supply chain initiatives and goals, generally with the following attributes:

- 4PL Common Services (invoice management, call centers, warehouse/distribution facilities, etc.

- Implementation Center (the business process analysis/scoping, and development of all activities into an open systems framework)

- Product/Skill Centers (supply chain engineering)

- IT System Center (the pure IT selection for design and implementation/connectivity)

- 4PL Back Office (administration, quality, finance, legal, etc.)

Sitting above these functions would be a Controlling Interface, monitored by the hired 4PL party. This group would manage all the "blocking & tackling issues" related to daily business. The Controlling Interface would provide the customer-facing visibility, control, KPI/Metrics management, reporting, daily problem solving, etc.

Additonally, surrounding these activity sets would be the following:

+ Knowledge Transfer

+ Business Development

+ Functional Support

So, to give you a visual field, picture a dartboard. From the center outward, there would be a series of concentric circles. In the center would be the 4PL. The next outer circle would be the strategic partners. The next outer circle would be the preferred service providers, following by the larges outward circle which covers the project partners.

The Business Ethics of a 4PL would contain the following ethos:

- The 4PL organizaton focuses on the customer supply chain

- All 4PL organization decisions are made towards managing the myriad of service providers, which are based on business rules.

- All service providers are measured on a master single set of KPI's

these kind of 3PL & 4PL types of businesses are more comenly seen in automibile induistries, manufacturing indurtries

Reward if Useful

Thanx & Regards..


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Answers (1)

Former Member
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refer link below

<a href="">3pl and 4pl</a>