In the complex and diverse world of logistics, it can be easy to get carried away with all the terms and definitions. Two of the most commonly confused terms are third-party logistics (3PL) and fourth-party logistics (4PL). While both third-party logistics and fourth-party logistics act as an intermediate party that has something to do with freight transportation, there are many differences between a 3PL and a 4PL. Here’s what you need to know to understand the differences between 3PL and 4PL providers and determine which one is right for you.
3PL
A 3PL model is when you outsource the distribution, warehousing, and fulfillment of your products. These service providers act as a middleman between your business and the carriers that deliver your products to customers. Using a 3PL provider will help you scale logistics capabilities so that you can move, store, and meet fulfillment demands as your business grows. A 3PL may also oversee packaging and crating of product, and sometimes offer additional services as needed. 3PLs are usually asset-based but may subcontract out pieces of the logistics, such as transportation. Factors like delivery requirements, shipping schedules, and market conditions all play a role in how they go about performing their role. 3PL services include:
4PL
Like a 3PL, a 4PL will manage the transportation, packaging, and storage of a business’s product, but they will also give strategic direction to the company based on analytics. Often 4PLs are non-asset based and shop around for different vendors to complete a supply chain for the best value. For industrial businesses, 4PL services should include procurement, materials planning, inventory management, inventory financing, warehousing, order management, order fulfillment, returns management, and supply chain design. 4PL providers offer services including:
Optimal transfer organization
Complete vendor management and supplier coordination
Synchronized inbound and outbound logistic operations
Custom-tailored managed distribution networks
Comprehensively-integrated technology offering
3PL & 4PL Still Sounding Similar?
The main difference would be the control and responsibility a customer would have or need to have when it comes to their supply chain. By hiring a 4PL in a contracted relationship, a logistics manager would essentially “give up” the responsibility to find the best logistics companies or carriers to take care of getting their shipments from one place to another. The 4PL would take care of all coordination of these parties behind the scenes (at a cost, of course).
Shippers who use one or more 3PLs, are still responsible for finding and managing the relationships with these providers, along with any asset-based carriers they also work with. These shippers tend to work with many different providers to obtain the best service and pricing possible for each lane and mode of transportation they need. By managing your own logistics providers, the decision is up to you – no contracts are requiring you to work with any certain providers.
Your Third-Party Logistics Provider
Taylor has been in business since 1850 their start began with a horse and buggy delivering paper from the steamships along the Ohio river to the book manufacturers. Their 170 years in logistics experience have outstood the test of time by providing their clients with the best in class performance. Taylor has proven they are not merely a vendor for your company but an extension of your team with a clear understanding of their responsibility to replicate the strategic business goals of your organization. What started as a one public warehouse operation in Cincinnati, Ohio, has grown into several fulfillment centers in Ohio and one in Nebraska. By being the Nation’s most progressive family-owned business, they’ve learned to modify their processes with top technology as the times change. With the introduction of e-commerce, pick and pack orders, and direct to the consumer, they’ve made sure their processes can handle every supply chain function for their customers. As a third-party logistics company, Taylor knows that offering one supply chain service decreases overall efficiency and sustainability; they’ve altered their business to suit the needs of their customers.
Talk With Taylor
While Taylor Logistics Inc fits the definition of a 3PL, we also offer 4PL services for those customers who want to outsource more of their logistics processes. Contact Taylor Logistics Inc. today to get started on the right logistics solution for your business.
