When we start to investigate logistics and order fulfilment, there are many strategies which companies can choose. The main objective is to discover the one which best suits your individual business needs.
There is also a misconception when it comes to looking at 3PL and 4PL logistics providers. The two solutions not only have one single number that separates them. Both have a significant impact on your operations and choosing the wrong provider can impact you financially.
What is a 3PL provider?
A 3PL refers to outsourcing logistics and supply chain management functions to a third-party service provider. Normally, they will house all product inventory within a fully serviced warehouse. Once the orders come in, the 3PL provider will arrange the most suitable delivery service and distribute them.
At the same time, a 3PL company will help to manage your inventory more effectively using WMS software. A WMS will update your incoming and outgoing stock and give real-time insights into the movement of products.
What is the role of a third-party logistics company within a business?
The role within a third-party logistics company will vary slightly with businesses being unique. The role of a third-party logistics company is to investigate the needs of the business with efficient solutions. For example, a business may provide next-day delivery as a unique selling point within your industry.
What is a 4PL provider?
A 4PL (fourth-party logistics) is a step above a 3PL. Commonly, a 4PL provider will manage 3PLs on behalf of the client. With this, they make themselves responsible within the supply chain, optimising the warehouse from initial resources to the infrastructure. A 4PL provides more of an overview of each part of your business’s logistic puzzle, and how it can be efficient.
With the logistics industry looking to be more complex in the future, 4PL will be a key part of assisting businesses.
3PL v 4PL – Which should I look to implement for my business?
By doing your due diligence on how a 4PL company can work and differentiate from a 3PL. You will need to decide which would work best for your business. A 4PL provider doesn’t automatically mean that it is better than a 3PL company, they have slightly different roles.
One of the main factors when making the decision is the current scale of your business. For SME businesses, partnering with a 3PL is often the most favourable. Most third-party logistics companies do a great job at managing components within your supply chain.
For larger businesses that are looking to invest and make a major expansion, a 4PL provider could be ideal.
A breakdown of what differentiates a 3PL and a 4PL:
| 3PL | 4PL |
| Acts as a service provider within your warehouse which handles logistics. | Serves the whole supply chain with a strategic and comprehensive role in managing every component |
| Maybe one of many points of contacts | Tends to be one single point of contact for the entire supply chain |
| Directly interacts with the client to manage specific logistics operations | Acts as an intermediary between the client and multiple logistics service |
| Often owns warehousing and courier contracts which they share with their clients | Usually doesn’t own assets but share analysis, management and optimisation expertise. |
About ProVision WMS 3PL Software
ProVision WMS 3PL is not a one-size-fits-all solution. We work with you to configure our software to the needs and requirements of your operation. To learn more about ProVision WMS third-party logistics, contact us today to request a demonstration.