3rd Party Logistics , 4th Party Logistics  & 5th Party Logistics
 

 

 

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:

*  freight forwarders
*  courier companies
* 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

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)

 

 

 

 

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:
 
  • 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.
     

  • 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
     

  • 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

 

  • 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.

 

Click here for further reading books and websites on Logistics

 

Click here to learn History of Logistics

 
 

 

 
 

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