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Fourth Party Logistics (4PL) Definition

Posted in Logistics Parties - 4 Mar 2019, 8:42 AM

Fourth party logistics also known as lead logistics provider company is quite similar to 3PL. Despite so, it has a wide gap when it comes to managing services to the clients. Common terms about party logistics are highly associated with 1PL, 2PL, and 3PL. However, it doesn’t stop at those classifications. Don’t you know that there is a brand-new model named fourth party logistics company, or better known as 4PL? For further explanation concerning the fresh term, learn more about it here below!

Find out What Lead Logistics Provider is

The scheme between fourth party logistics and third-party logistics is nearly the same. To avoid misleading ideas, it’s vital that you understand the definition of 4PL itself. It is identified as a non-asset-based entity that works independently with great accountability. It relies on the resources immediately from its organization.

The role of the lead logistics provider company is more than what people have expected. Interestingly, it handles third party logistics entity. The joint action comes with an objective to plan, establish, and comprehensively carry out the solutions of the supply chain for consumers or consignees. In most cases, this sort of company has a go with an electronic interface system fully integrated. 

The Characteristics of a Lead Logistics Provider

The clear difference between fourth party logistics and third-party logistics companies is the integrity factor. In simple terms, the 4PL has higher integration. When the working system is highlighted, the operator of 4PL has full responsibilities in designing and even taking over the total process. Meanwhile, the consumers indicate what to store and where supplies are transported.

The basic model of 4PL can be observed especially when the main parties (at this case is goods manufacturers) outsource the transport operation, and with the management of administration. Another interesting fact is that this company is fully accessible in monitoring the whole processes of logistics. Besides, it coordinates numerous activities like making sure that the supply chain whether it’s perfectly carried out or not.

How to Easily Differentiate between 4PL and 3PL

In comparison to 3PL, 4PL tends to be accountable in providing services to clients. Arguably, the level of services in consulting is relatively higher. Some points are differing from 3PL including cost strategies, working efficiency regarding taking over, supply chain solution, impartial feedback, and not to mention the neutral management. Concisely, fourth party logistics and third-party logistics companies have a wide difference. 4PL has broad capacities in managing the whole processes in logistics.

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