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The Difference Between 3pl and 4pl

learn how to choose the best one for your supply chain needs

  • Written by Tess Holman
  • Published on December 5, 2023
  • Time to read 9 minutes

Introduction

In today’s fast-moving business environment, handling logistics efficiently is crucial for companies aiming to stay competitive and meet customer demands. 3PL (Third-Party Logistics) and 4PL (Fourth-Party Logistics) services are often confusing logistics methods. Despite the fancy names, they do different jobs. 

This blog post will simplify logistics and highlight the significant differences between 3PL and 4PL logistics. This will help you choose the right one for your supply chain needs without getting lost in jargon.

Explaining 3PL Logistics

Let’s start with 3PL logistics. A Third-Party Logistics provider, or 3PL, is like a helper from outside that assists a company with tasks related to its supply chain. These tasks include moving stuff, storing it, sending it out, and sometimes even delivering it to customers. Here are the main things to know about 3PL logistics:

  • Different Jobs: 3PL providers offer different services, such as shipping, storing, and packing, to solve specific logistics problems.
  • Sharing Control: Unlike 4PL, 3PL providers work with your company but don’t take complete charge of the supply chain.
  • Own Stuff: Most 3PL providers have their warehouses, trucks, and other logistics stuff, which helps keep costs down.
  • Changeable: 3PL services are flexible so that you can use more or less depending on your business needs. This is handy if your needs go up and down.
  • Money Saver: Hiring a 3PL can often cost less than running all your logistics alone.

Getting to Know 4PL Logistics

Let’s talk about 4PL logistics, which is like a big coordinator for your entire supply chain. A Fourth-Party Logistics provider, or 4PL, takes charge of everything related to your supply chain. Here are the main things to know about 4PL logistics:

  • Total Control: Unlike 3PL providers, 4PL folks control entirely your supply chain. They manage everything, from finding the stuff you need to delivering it to your customers.
  • No Stuff of Their Own: 4PLs usually need their warehouses or trucks. Instead, they’re good at organizing and making sure things run smoothly.
  • Long-Term Planning: 4PL providers are into planning for the long haul. They work closely with your company to ensure your supply chain meets your business goals.
  • Tech Experts: 4PLs use fancy technology, like computer programs and data analysis, to improve your supply chain
  • Handling Many Helpers: Part of what 4PLs do is ensure all the companies helping with your supply chain work well together.

Comparing the Big Differences

Now that we’ve explained the main things about 3PL and 4PL logistics, let’s compare them.

1. What They Do

  • 3PL: Helps with different logistics tasks you choose.
  • 4PL: Takes charge of your entire supply chain from start to finish.

2. Who’s in Control

  • 3PL: Works together with your company but needs to take full control.
  • 4PL: Takes complete control and makes critical decisions.

3. Stuff They Own

  • 3PL: Often has its warehouses and trucks.
  • 4PL: Doesn’t own warehouses or trucks but is excellent at organizing.

4. What They Focus On

  • 3PL: Focuses on doing logistics tasks well.
  • 4PL: Plans for the long term and ensures logistics help your business succeed.

5. How They Use Technology

  • 3PL: Uses technology to make specific tasks better.
  • 4PL: Uses high-tech solutions to make the entire supply chain work smoother.

6. Managing Other Helpers

  • 3PL: Usually doesn’t manage other companies helping with logistics.
  • 4PL: Makes sure all the different companies helping with logistics work well together.

Choosing Between 3PL and 4PL Logistics

Deciding between 3PL and 4PL logistics depends on your supply chain’s complexity, your business goals, and how much control you want. Here’s when each might be better:

Go for 3PL Logistics When You:

  • Have specific logistics tasks you want to get help with.
  • Want to keep some control over your supply chain.
  • You need to change your logistics needs often.

Choose 4PL Logistics When:

  • You want someone to handle your entire supply chain from start to finish.
  • Your supply chain is complicated, with lots of companies involved.
  • Making sure your logistics match your long-term business goals is very important.

Conclusion

In a nutshell, 3PL and 4PL logistics are different, even though the names might sound confusing. Knowing these key differences can help you make the right choice, whether you like the flexibility of 3PL logistics or the complete control and long-term planning of 4PL logistics. Ultimately, it’s all about improving your supply chain and helping your business succeed in today’s fast-paced business world.

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