ASSIGNMENT

SUPPLY CHAIN MANAGEMAENT

Topic: - Third Party Logistics (3PL) and Fourth Party Logistics (4PL)

SUBMITTED BY SUBIMITTED TOLALIT VERMA Mr. Mohd. Ahsan Sadiq

ROLL NO- 15-MBAK-99 Assistance professor

En. Number - GE1826 Aligarh Muslim University,

Malappuram Centre, Kerala

Date- 17-nov-2016

Third Party Logistics (3PL) and Fourth Party Logistics (4PL)What is a 3PL?

A third party logistics company is one that works with shippers in order to manage another

company’s logistics operations department. 3PL is the action of outsourcing activities that are

related to logistics and distribution.

What is a 4PL?

The concept of a 4PL provider is an integrator that accumulates resources, capabilities and

technologies to run complete supply chain solutions.

Main Difference between 3PLs and 4PLs

The 3PL targets a single function, whereas the 4PL manages the entire process. A 4PL may

manage the 3PL.

3PL

3PL created the basic foundation of logistic outsourcing by facilitating services such as

transport, forwarding, and warehousing.

Third party logistics providers usually specialized in

Integrating operations

Warehousing

Transportation services

Cross-docking

Inventory management

Packaging

Freight forwarding

These services are scaled and customized to the customer’s specific needs based on their market

conditions and the different demands and delivery service requirements for their products or

materials.

There are thousands of 3PLs in the market that offer different models and perform different

tasks. For example, certain 3PLs may only specialize in certain industries.

Date- 17-nov-2016

The 3PL have a large footprint throughout the country. This makes it viable for companies to

service clients in remote regions at a much lower cost than doing it themselves.

Types of 3PL Providers

1.     Standard

Basic activities: Pick and pack, warehousing and distribution.

2.     Service Developer

Value-added services such as tracking and tracing, cross-docking and specific packaging

3.     Customer Adapter

This comes in at the request of a customer. It is when the 3PL takes over complete logistics of

the firm.

4.     Customer Developer

This is the highest level of 3PL. This is when the 3PL integrates itself with the company, and

ends up taking over the entire logistics operation.

4PL

A 4PL aims at being a complete solution fulfilling needs which fall outside the scope of a

3PL.

Functions provided by a 4PL company

Procurement

Storage

Distribution

Processes

A 4PL company takes over the logistics section of a business. This could be the entire process, or

a side business that’s imperative to have as part of the main business.

An example here would be a bicycle importer. The main function is to import bicycles however,

they need to have spare parts for these unique bikes. A 4PL would manage the total logistic

operations for the spare parts business.

Date- 17-nov-2016

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

Part or Comprehensive?

3PL: 3PL services are aimed at specific parts of the entire supply chain. They provide the final

pieces for an established foundation. For example, within transportation management, 3PLs

handle freights contracts for freights, containers and shipments. But, they do not offer ways to

optimize cost and suggest the correct technology to benefit the process.

4PL: 4PL services bring together various different transactions and steps to create a streamlined

process that optimizes costs and uses the right resources. They integrate various fields and

collaborate between different departments to provide end results of the value proposition for

companies and their customers.

Big or Small?

3PL: Not every company has the financial resources and the time to redesign or strategize their

entire supply chain. Often companies prefer to outsource specific procedures that are in need of

being fixed. Some companies prefer to have control over the core design and let various parties

handle the elements within.

4PL: 4PL initiative is a big step in terms of finance, time, and trust. The building of an entire

supply chain requires intensive collaboration, discussions and modeling of various different

scenarios. This requires time and money. 4PL’s are also completely outsourced services which

mean the company hands it’s entire working process into the palms of another.

Date- 17-nov-2016

Difference between 3PL and 4PL

Third party logistics Forth party logistics

A 3PL logistic provider gives its customers ,

services for part, or all of their supply chain

management function

A 4PL provider accumulates resources,

capabilities and technologies to run complete

supply chain solutions

3PL supply chain focuses on niche aspects and

excels at providing services it excels in

4PL provider targets a board array of solutions

to manage the entire supply chain process.

4PL services can include 3PL management

3PL offers warehousing, clearing, safety,

inbound and outbound transportation,

packaging and contracting transporters

4PL deals with supply chain planning,

management, assistance, optimization

3PL is best suited to organization with a supply

chain design in place and need to execute the

process

4PL services are suited to organizations

looking for a start-to-end streamlined solutions

to design and execute all the elements of

supply chain

3PL services usually include collaboration

between in house and outsourced parties as

certain processes are carried out by the

organization themselves

4PL services are entirely outsourced. These

are usually given to reputable organizations so

as to let a company focus on its core

competencies.

Real life example of 3PL : UPS supply chain solutions

UPS and FedEx have also added minor repairs and simple assembly to the set of services they

offer to their clients. Managing simple repairs at a UPS hub significantly cuts down on the

supply chain effort to handle simple PC repairs when the product is under the warranty because

the product never has to travel beyond the UPS hub.

Date- 17-nov-2016

Menlo Logistics is a global supply chain company operating in 5 continents and 20 countries. Its

core business offerings include third-party logistics and supply chain management.

Real life example of 4PL: Kuehne + Nagel International AG  is a global

transportation and logistics company based in Schindellegi, Switzerland

It provides sea freight and airfreight forwarding, contract logistics and overland businesses; with

a focus on providing IT-based logistics solutions.

Its freight forwarding (sea / air) services, include the necessary arrangement for

the transportation of goods by road and rail. Its contract logistics unit

offers warehousing and distribution services.

KN Lead Logistics Solutions includes 4PL Management, Supplier & Inventory Management,

Aftermarket Management and Supply Chain Technology. KN Lead Logistics Solutions acts as

the single point of contact with full operational responsibility with focus on supply-chain

integration.

Kuehne + Nagel's solutions extend to the world's largest industries

including: aerospace, automotive, fast-moving consumer goods, high-tech & consumer

electronics, industrial goods, oil & gas, retail, pharma & healthcare.

Conclusion   Some 3PLs have not fully stepped up to meet the exact needs of customers. Some

have become too focused on "managing" tasks, not processes and on serving the parent

company's core business, and have missed opportunities to present value. As a result, 4PLs have

become alternatives for business process outsourcing. These new BPO logistics service providers

enable firms to manage a critical part of their supply chain by providing visibility and integration

across multiple enterprises. They manage with the three key elements of process, people and

technology. Users of a 4PL can focus on core competencies and better manage and utilize

company assets and resources, as to inventory and personnel.

Date- 17-nov-2016

References Supply chain Management , Strategy, Planning and Operation,( Sunil Chopra, Peter

Meindl, Dharma Vir Kalra)

http://www.ups-scs.com/

https://www.google.co.in/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-

8#q=kuehne%20nagel%20wiki

http://www.supplychain247.com/company/menlo_worldwide_logistics

https://en.wikipedia.org/wiki/Menlo_Worldwide_Logistics

http://www.ltdmgmt.com/4pl.php

http://cerasis.com/2013/08/08/3pl-vs-4pl/

http://www.cquential.co.za/industries/3pl-4pl/

http://www.scmo.net/faq/is-scmo-a-3pl-or-a-4pl/

Date- 17-nov-2016