Fourth-party logistics (4PL): Simplified Definition

A 4pl (fourth party logistics provider) is a high level supply chain management and logistics service provider. A 4pl manages and provides a single interface between all aspects of the supply chain and the client organization. They provide strategic advice and operational support to their clients, and are a form of business process outsourcing.

Fourth-party logistics (4PL): Technical Definition

ClickPost defines 4pl as a fourth party logistics provider, which is a high level supply chain management service that provides the user complete control over end-to-end logistics, order fulfillment, and customer service from a unified interface; thereby optimizing the entire operations and enabling ecommerce businesses to focus on the long term growth of the business.  

What is the difference between 3pl and 4pl?

A 3pl general manages a part of the supply chain rather than the entire operation like a 4pl. A 3pl also generally owns shipping and warehousing assets, which are used for serving the client. A 4pl on the other hand is entirely focused on providing operational support and generally does not own any assets. Additionally, the primary focus of a 3pl is on the day-to-day operations whereas a 4pl focuses on long-term growth and optimizing the supply chain.

What are the components of 4pl?

The following are the usual components of a 4pl:

1. Control Room

The control room, also known as the customer service portal or dashboard, is the unified interface provided from where the client can view and manage their entire operations.

2. Resource Provider

The 4pl is responsible for finding and partnering with appropriate resource providers for their clients. These may include shipping and logistics service providers, warehouses, customer service providers, and whatever else is required by the client.

3. Information

The 4pl is responsible for providing analytics and strategy reports to the clients to ensure long-term growth and to achieve immediate objectives. They are responsible for planning and executing the strategies to fulfill the needs of the client.

What is 4pl in ecommerce supply chain?

4pl in ecommerce supply chain is a type of logistics service provider that arranges and manages the entire supply chain, including procuring and warehousing products to shipping and fulfilling customer orders. They also delegate parts of the supply chain to various 3pl and act as the consultant or middleman between the client and other service providers.

What are the benefits of 4pl?

Some benefits of 4pl are:

1) It enables you to outsource the entire logistics operations of your business. This increases efficiency in the long run and grants you instant access to specialized service providers.

2) It gives you total control and visibility over all aspects of your business and aggregates the entire data to provide you with a unified view. You can also benefit from data analysis without shifting focus from your core business.

3) It allows you to focus on your core competencies while granting you access to automated processes that increases operational efficiencies.

4) It provides a financial incentive for you as the greater operational efficiencies reduce overall costs.

Who uses 4pl?

4pl is used by businesses in a wide range of industries. A 4pl can be a viable choice for any business looking to optimize their operations by taking the help of experts, without delving into the complexities of acquiring talent and managing human resources.

Is Amazon a 3pl or 4pl?

Amazon can be regarded as a 4pl as they provide all the services that a 4pl is supposed to offer. They provide warehouses for sellers on their platform and provide their website which serves as a marketplace. Additionally, they provide order fulfillment and shipping services, while also handling payments and customer support from their platform.

How does a 4pl work?

A 4pl works by providing their client access to all the resources and services that are needed to achieve their business goals. They provide access to both operational and strategic resources as and when needed. They enable businesses to focus on their long-term growth without worrying about the day-to-day operations. Additionally, they provide access to an optimized supply chain, enabling their clients to reap the benefits of economies of scale.