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3rd Party Logistics , 4th Party Logistics
& 5th Party Logistics
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We heard of 3PL i.e 3rd party logistics, then 4PL
and now 5 PL ?
3PL is defined as follows:
"A firm [that] provides multiple logistics services for use by
customers. Preferably, these services are integrated, or "bundled"
together, by the provider. Among the services 3PLs provide are
transportation, warehousing, cross-docking, inventory management,
packaging, and freight forwarding."
Third-party logistics providers are:
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* freight forwarders
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courier companies
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other companies integrating & offering subcontracted
logistics and transportation services
In the "PL" terminology, it is important to differentiate
the 3PL from the:
1PL, which are the shipper or the consignee,
2PL, which are actual carriers,
4PL (Fourth-party logistics provider, abbreviated 4PL,
lead logistics provider, or 4th Party Logistics provider),
which were originally just consulting firms specializing
in logistics, transportation and supply chain management
such as Rollins, Deloitte, SCMO (company), BMT Limited, or
Accenture. Now a new crop of companies have emerged who
are actual transportation companies too. While a 4PL is
sometimes described as non-asset-owning service provider,
their role is to provide broader scope managing of the
entire supply chain.
Thus, 3PL is Third Party Logistics means out sourcing your
logistics
4PL is Consultancy to
provide appropriate 3PL service provider
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Now, along comes the
5PL who sometimes define themselves as broadening the scope
further to e-business.
You might question anything more elaborate than a 3rd party
providing logistics consultation or management, no matter
how advanced or far-reaching their service might be. So are
they still 3PLs who just invented a fancy title to set them
apart from the competition, or is there a real
differentiation?
A 4PL is neutral and will manage the logistics process,
regardless of what carriers, forwarders, or warehouses are
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used. The 4PL can and will even manage 3PLs that
the customer is already currently using. Many 4PLs have addressed
the huge requirements of electronic interface between numerous
companies.
An emerging sub sector is the 5PL firm attributed to logistics
service providers who plan, organize and implement logistics
solutions on behalf of a contracting party (mainly information
systems) by exploiting the appropriate technologies (conceptual
level).
There is actually a company called "5PL Systems". They have
developed wireless end-to-end tracking of containers system which
will allow government agencies to receive information on container
shipments (all part of the process) |
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Outsourcing is often
taking a set of work, tasks, responsibilities or functions and
transferring them to an outside service provider. Business
Processing Outsourcing (BPO) involves that and more. A BPO
service provider brings a different perspective, knowledge,
experience and technology to the existing function and can and
will work with the firm to re engineer it into an improved or
new process. It is an outcome-based result, not just a pure cost
reduction issue.
One of the more troublesome, complex logistics issues is the
inbound supply chain from Asia. How do you manage the critical
supply chain and suppliers who are thousands of miles away, in
different countries and in different time zones?
Managing this vital part of the supply chain can be frustrating
and time consuming. Vendors shipping dates, expediting and
changing orders, giving direction to consolidators or 3PLs as to
delivery requirement are just some of the challenges dealt with.
It is hardly a seamless process. An excellent opportunity for
"super logistics providers" (4PLs) to meet..
A 4PL, with real world experience dealing in Asia, should be
able to present a way for customers to take control of their
inbound supply chains. This BPO firm will provide |
each customer with the
technology, the people and the process to manage purchase
orders, suppliers and shipments in Asia. They can structure the
relationship and the process in a way that best meets the
requirements of the customer, rather than the customer having to
accept what the outsourcing provider has to offer.
There are different views on PLs too and therefore for a better
understanding the following too is an interesting read:
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It all ends
with 3PL. 3PL derivative of 1st P, 2nd P.
The first P is the principal and the second P is his
customer. These two parties appoint a Third Party to
take care of their Logistic is called the 3PL. Of
course, it is a bundle of services that a 3PL
offers, even those services which the 3PL does not
offer directly.
In this case those service providers who also offer
services DIRECTLY to the 1st P and 2nd P are either
called 3PLs, in case they have a direct contractual
obligation to either the 1st P or the 2nd P. But in
most of cases either the “1st P” or the “2nd P” ask
the 3PL to engage all such partners in order to have
the “bundle” in place even for consultancy . They
are hired by the 3 PL and the 3PL will have a fee to
manage them on Board.
Spear Logistics engages transporters " called
Carrier Management" and other service providers for
different services as vendor for the 1st P or the
2nd P.
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4 PL is a new
concept which is consultancy , to provide services
to customers hunting for 3PL service provider . 4 PL
maintains data of 3PL service providers , and
recommend the best which suits to customer
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All after the
3PL, any LSP attached to the 3PL are the vendors of
3PL in case any of the services are outsourced. If
the services directly out sourced by either the 1st
or 2nd Party , then its another 3PL for them. There
is no question of 4PL. It is only a 3 PL
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4PL and 5PL are new
business fundas to market his/her competencies in a better
packaging. Just think, somebody saying I can provide you
the details of 3PL service providers (Seems Old) and other
way round - We are 4PL service providers and we provide
the consultancy services to solve your 3PL problems.
JUST SEE THE DIFFERENCE. Packaging is also one of the
parts of Logistics and 4PL is new packaging.
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Click here to learn History of Logistics |
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