Features of a 4 PL

Covers the entire supply chain of the customer Providers Collaboration between two or more logistics service providers on a resource-sharing basis to provide solutions for a common customer.


Flexible arrangements

The Following are the requirements of a 4 PL


# 3PL cost advantage is achieved once through the contract process

# Performance and competency across the logistics network

# Logistics planning and consulting

# IT support

# Operational and administrative logistics functions

# Customer Relationship Management

# Linking analytical capabilities with strong implementation and operational capabilities

# Building high level of customer confidence in outsourcing and its solutions

# Offering transparent and flexible win-win contract


Benefits to companies using 4PL services:-


  • Reduced inventory and cycle time.
  • Improved delivery performance
  • Lower supply chain cost.
  • Improved order fulfillment, capacity utilization. 


Total productivity.(Overall productivity.)

4PL tries to do the following to create value

# Reduce complexity / eliminate redundancy. Economics of Scale Tailored Solutions Better Customer Service at Lower Costs. Access to new technology.

# Select service provider

# The selection of a service provider is a strategic one and has a long-term impact on the customer service capabilities of an organization.


Major issues to be considered before choosing a 3PL or 4PL partner


Switching cost

Outsourcing logistics services results in restructuring the company's existing assets in line with the service provider's practices. This includes activities such as managing existing assets, deploying existing assets to the service provider wholly or partly leasing and selling existing assets, and completely switching over to the service provider's use of logistics infrastructure. Every activity involves a high level of risk. Although outsourcing significantly reduces costs, moving to other service providers and stabilizing the new system will do more harm in case of poor customer service during the transition period.


Degree of Control:

In order to obtain the service desired by the end user, the outsourcing firm must be particular about the degree of control over the activities of the service provider. It is not possible to have direct control over the activities of the service provider but the service provider should ensure timely availability of information to monitor the activities.


Degree of outsourcing


The following factors affect the logistics outsourcing of an organization either partially or in totality:


- The company's existing logistics infrastructure

- Management's policy for third party involvement - Anticipated profit - The company's product portfolio should be clearly differentiated between the outsource and the service provider's end of responsibility and jurisdiction over both.


Channelizing logistics services to suit the needs of channel partners

 Logistics service standards are to be determined as per the requirements of the channel members who in turn provide service to the end users or consumers. Logistics acts as a key enabler for efficient channel management. Channel and logistics management must go together for an effective and efficient physical distribution system.


Interface: 

Appropriate coordination through an intelligent interface is essential for the proper functioning of two organizations together in partnership. A mix of cultures is essential. Proper interface between the employees of both the organizations is very important for formulating policies and guidelines for the smooth functioning of the outsourcing firm and the service provider. Mismatches in the techniques used at both ends can also cause problems. Differences in technologies used in communication, material handling, warehousing, inventory management can cause delays and errors resulting in performance below expected levels.