You are likely familiar with the term “third-party logistics,” or 3PL, especially if you have read other articles on this site. You may not, however, be familiar with the concept of “fourth-party logistics,” or 4PL. This is understandable, since 4PL comes up much less often. It is important to know how to recognize and differentiate between these two types of services since they have very different uses when it comes to your own logistics operations.
What Are Fourth-Party Logistics Services?
Picture a bicycle wheel, with each spoke representing a different part of the supply chain or fulfillment process. One spoke is for business management, one is for client relations, another is for IT support, etc. In this wheel, the central hub is your 4PL company, which provides oversight and integration between the different components. By ensuring everything is coordinated and managed properly, 4PL services help maintain an effective workflow across all aspects of your business.
What Are Third-Party Logistics Services?
A third-party logistics provider is a company that offers various supply chain functions which other businesses can outsource to. For instance, many 3PL companies operate warehouses and allow space to be rented and used. There is often an emphasis on inventory management, shipping, and related value-added services like pick-and-pack, kitting, reverse logistics, etc. In most cases, 3PL services are scalable based on the client’s needs.
3PL vs. 4PL
Strictly speaking, there is no “winner” when it comes to trying to compare third- and fourth-party logistics services. This is because the two have very different scopes of practice. To use the previous wheel metaphor, 3PL would be a single spoke that concerns itself with supply chain management matters like warehousing and order fulfillment. 4PL, meanwhile, aims to be a central interface that lets all of the business’s services, including any 3PL ones being used, to run smoothly together.
For example, 3PL companies may run warehouses and manage the flow of goods during storage and subsequent distribution, but a 4PL company would make sure products are arriving at the warehouse in the first place. One of the key takeaways from this is that 3PL and 4PL services can and do intersect, but they are not competitors. You can have 3PL and 4PL companies operating simultaneously, or you can only use one. The decision is often based on size of operations and how difficult it is to coordinate all the moving pieces on your own.
APS Fulfillment Inc. is a leading 3PL service company that operates out of Miami, Florida. Our integrative approach tackles supply chain management, real-time inventory management, warehousing services, shipping, and everything else needed to ensure your goods get to their destination. We’ve stored, sorted, delivered, and quality-assured products of all shapes and sizes for all kinds of companies across a wide variety of industries. Contact us by phone at (954) 582-7450 or by email at [email protected] for more ways third-party logistics services can support and grow your business.