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On May 19, 2023 by Josh Arrowsmith
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In an era where global supply chain inter-connectivity has never been more possible, logistics and supply chain management has become unnecessarily complex and congested as more and more stakeholders have been added into the chain of supply. Measuring, managing, and coordinating each aspect of product production, shipping and storage with packing and distribution has presented multiple challenges for any Operations and Supply Chain Directors, not least with recent fluctuations in freight costs and a COVID-19 induced slow-down of manufacturing.
That’s why more and more organisations are outsourcing to a 4PL (fourth-party logistics) partner and integrating it into their operational strategies. The market is growing rapidly, and by 2030 is expected to have doubled in size vs. 2021 to nearly £75bn.
But what is 4PL, and why would organisations adopt a 4PL strategy over other operational frameworks like 3PL?
4PL is an operational model where organisations outsource their entire supply chain management to one external provider. The goal of 4PL is to manage and oversee the entire supply chain on behalf of their client. You might also see 4PL referred to as LLP (lead logistics providers).
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4PL takes on the role of end-to-end supply chain management. A 4PL provider will oversee and coordinate all logistics activities and functions, including freight and duty management, warehousing, inventory management, supplier management, product distribution, and returns management, ultimately seeking to optimise each aspect of the client’s supply chain. In some instances, 4PL providers also handle the customer service function on behalf of their clients, dealing with the end recipient/user of the products, triaging and answering all queries relating to each given enquiry.
A 4PL acts as a single point of contact for clients, consolidating and managing all key relationships within a supply chain, including 3PLs, suppliers, and other stakeholders. They coordinate and communicate with all parties involved in the supply chain to ensure smooth operations and efficient execution.
4PLs will use tech-based solutions to optimise operations, track shipments, manage inventory, and provide real-time insights and analytics to clients.
Additionally, 4PLs act as a consultant to their clients, analysing processes to help streamline operations and save on costs.
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The main difference between a 3PL and a 4PL is the level of involvement and responsibility they have in managing the logistic operations of a supply chain.
Whilst a 3PL handles specific functions within a supply chain – such as warehousing, packing, and distribution of products – a 4PL goes beyond the services of a 3PL and takes on a more strategic role, overseeing and coordinating the entire supply chain on behalf of their clients, acting as a single point of contact.
3PL Key Features
4PL Key Features
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Generally, a 4PL provides strategic coordination and management of the entire supply chain, ensuring seamless operations and efficient logistics processes. This may suit organisations with complex or multi-faceted supply chains, or those that require coordination of multiple logistics providers.
Furthermore, a 4PL partner can empower organisations to focus on their core competencies, whilst relying on 4PL to manage their supply chain for maximum value.
For businesses in a high-growth phase, 4PLs can rapidly add warehousing space to their network, meaning you can expand your distribution quickly.
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Finishing Line are experts in domestic and international supply chain management. From freight and duty management, to product assembly, storage, and distribution, to returns and customer service management, Finishing Line has the capability and experience to manage each aspect of your supply chain. Our port centric location allows our clients to take dual advantage of the lowest cost of inbound landside container haulage for incoming containers and lowest cost of outbound distribution into London, the Home Counties, and international markets. In both aspects, with the benefit and efficiencies of a single stock pool, lowest transportation cost is linked to shortest lead time, fastest response, and speed of delivery.
We support our clients with seamless end-to-end fulfilment with solutions that are flexible and scalable to meet specific business needs and objectives. Speak to us today to find out more about how our supply chain outsourcing services can benefit your business.
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Here at Finishing Line, our aim is to provide key information on any and all developments that occur within the supply chain and logistics industry, keeping you up to date on all advancements surrounding the market, how your eCommerce business could benefit in outsourcing 3PL/4PL supply chain solutions, and everything else you should be aware of in this competitive climate.
If this article has been a useful read on how Finishing Line can offer these solutions for your business, sign up to our email newsletter below to gain more industry insights that we at Finishing Line can provide you, with 35+ years of experience. Check out our services; amazon fba prep, co-packing solutions, ecommerce order fulfilment, pick and pack services, returns management solutions, or storage and warehousing services.
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