Shipping logistics can appear complicated at first, and understanding what shipping needs your company requires can greatly help the way you do business. Let’s explore the different kinds of logistics operations available and what sort or transportation management is right for your business model.
A logistics company handles the movement of goods from one place to another. The type of logistics you need depends on the size and demands of your company. The consultative services offered by a logistics company will vary according to the nature of each industry.
For example, a farmer who moves his produce directly to a store to sell would be participating in a first party logistics supply chain. There is no business outside the relationship between the farmer and their single point of contact. If that farmer uses a courier or local delivery service to get his produce delivered, they are now part of a second party logistics supply chain management system.
3PL and 4PL supply chain solutions can take this process a step further. They can provide cost effective solutions for businesses. The main difference between 3PL and 4PL companies is that a 4PL company will manage a 3PL on behalf of a client.
3PLs and 4PLs analyze and organize large amounts of shipments and coordinate multiple deliveries across the globe. They do this by relying on a large number of intermodal locations. A dense network of ports, railyards, warehouses, trucks, and other industrial mainstays allow these companies to create efficient routes to move cargo.
What is a 3PL?
A third-party logistics, or 3PL, company manages all transportation logistics for your cargo on your behalf. They get your products from one place to another and their services can include warehousing and packing. A 3PL will often have assets, machinery, warehouse, and vehicles to perform these services. So, the company has a vested interest in optimizing their transportation system and will incorporate your supply chain into their operations.
Advantages of 3PL
There are a number of advantages to working with a 3PL company. Since they are outsourced logistics services, they manage internal business organization to make shipping, receiving, long-haul transportation and drayage services all over the world.
Working with a 3PL allows small to medium businesses to integrate their supply chain into an existing network. Smaller businesses that rely on overnight shipping and long-haul trucking to transport their cargo can greatly benefit from the strategy a 3PL partner can provide. This can help reduce time, cost, and error.
Disadvantages of 3PL
It is important to select your 3PL partner carefully. Working with an outsourced company means operations occur mostly with little supervision from your business. Quality control is a huge issue. If something goes wrong with a delivery to one of your customers, your business’ reputation is on the line, not the 3PL.
What is a 4PL?
A 4PL is also called a lead logistics company. They take your supply chain management a step further, handling all third-party management, internal project management, inventory, and coordination. It is almost like having an ‘in-house’ 3PL service within your company.
Advantages of 4PL
A 4PL is unbiased. As they are not asset based, they select the best and most optimal transport and shipping services for you. They provide a great combination of good value and service, while letting you be in control of your business operations.
Disadvantages of 4PL
A 4PL will have quite a bit of involvement in your business operations. In order to get the best value and service, their strategy may take preference over yours.
Working with a 4PL is more expensive since they provide more services. This may be cost-prohibitive for small to medium businesses.
3PL vs. 4PL – What’s Best for Your Company?
Working with either a 3PL or 4PL can improve your business operations. When deciding between the two consider the size and scale of your company. Companies that need more logistics work may benefit greatly from working with a 4PL. On the other hand, companies with a regular and consistent supply chain may only require 3PL solutions.
The Takeaway
Having a company handle the logistics, transport, and fulfillment of your product can be a great benefit to your business. It allows you to focus on innovation, customer service, and marketing. Whether you decide on working with a 3PL or 4PL will depend mostly on your business needs. Call Asiana USA at 855-500-1808 today to see how you can get started.
