Which is better, 3PL or 4PL?
If you are among the many confused about what is better, 3PL or 4Pl, it ends here. With the increasing challenges of in-house logistics, PL or party logistics started to bloom worldwide. From 1PL or one-party logistics, even 5PL of five-party logistics are available for better supply chain management. These different services serve the fundamental purpose of transporting goods from one place to another.
The difference among them is only how they efficiently fulfill the ever-changing clients’ needs. The most popular is the 3PL and 4PL, third-party and fourth-party logistics providers like Go Freight Hub.
So, to clear your doubts about which is better, 3PL or 4PL, let us take a deep dive to know about all the PLs for you to choose the right one.
What are the party logistics in supply chain management?
Outsourcing logistics is the new norm boosting the truck and freight moving industry worldwide, especially in America. Many companies now sell products worldwide and need shipping and freight services to deliver the goods safely to the customer’s doorsteps. But they do not want to focus more on logistics as it may cut down their core functions for improving the business. Hence from 1PL, there are 5PL or fifth party logistic providers to be the major components of the supply chain management. The following ways will describe their functions to understand outsourced logistics easily.
1. 1PL or first-party logistics is transporting goods from manufacturer or farmer to the shops directly
2. 2PL or second party logistics is when manufacturers or farmers use vehicles like trucks to transport goods from one place to another, like fruits from farms to stores
3. 3PL or third-party logistics is when the manufacturer or farmer outsources the logistics to the best 3PL provider to transport goods along with providing value-added services like packaging & crating, customs handling, processing payments & others, oversized loading, dangerous materials transport, and reverse logistics.
4. 4PL or fourth party logistics, apart from doing all the functions of the 3PL, also offer strategic insights got from analyzing the data for better execution of the clients’ supply chain
5. 5PL or fifth party logistics offers innovative logistical solutions for developing an optimum supply chain management for increased value and gaining efficiencies all through it
3PL VS 4PL
Having seen the many types of party logistics, you must know the difference between 3PL and 4PL for choosing the right one as per your logistical requirement. Both 3PL and 4Pk have their advantages as per the situation and the client’s need; you should know the differences to choose the right one. Though the 4PL does most of the functions of the 3PL, there are many significant differences between the two, including others.
· While 3PL is ideal for small to medium companies, 4PL is best for medium to big businesses as they handle the entire supply chain compared to 3PL, focusing only on logistics.
· The 3PL providers focus more on day-to-day logistical operations, while 4PL focuses more on the integration and optimum levels.
· 4PL services have many own assets like warehouses and trucks, but except for a few 3PL providers like Go Freight Hub, others will not have such assets
· 4PL provides the highest level of logistical services coordinating many activities of 3PL providers as they focus more on one-off transactions
· While 4Pl has a single point of contact for all supply chain management, 3PL manages only specific aspects of it internally.
From the above facts and differences between 3PL and 4PL providers, 4PL is ideal for big businesses, and 3PL is best for small and medium businesses. But still, the right choice depends on your business needs and affordability.