3PL TO 4PL

GROUP 5

EVOLUTION OF LOGISTCS

THIRD PARTY LOGISTICS (3 PL)

It is a firm that provides service to its customers of outsourced logistics services

for part, or all of their supply chain management functions

Third party logistics providers typically specialize in integrated operation,
warehousing and transportation services
Some 3PL services are : Transportation
Customs clearing and forwarding
Warehousing
Inventory management
Distribution and order processing

THE EVOLUTION OF 3PL MARKET IS EXPLAINED WITH

REFERENCE TO THREE DISTINCT PHASES
In 1980's many transportation and warehousing firms
developed into 3PL providers
( e.g. Exel Logistics and Frans Maas )

In the early 1990's firms that specialized in express parcel

deliveries entered the markets
( e.g. DHL, TNT , UPS and FedEx )

In the late 1990's , companies originally specializing in financial

services , I.T. services and management consulting entered the
market by developing competence in information systems and
supply chain planning

SERVICES PROVIDED BY 3PLS

Service Category

Basic Service

Some specific value added services

Transportation

Inbound, outbound by ship,

truck, rail, air

Track/trace, mode conversion

Warehousing

Storage, facilities
management

Cross-dock, in-transit merge,

inventory control

Information
technology

Provide and maintain

advanced information
systems

Transportation management
systems, warehousing
management

Reverse logistics

Handle reverse flows

Recycling, customer returns,

repair/refurbish

Other 3PL services

Customs brokering, hazardous

material, order taking,
consulting, port services, etc.

WHY USE 3PL

Focus on core competences

Providing better quality service
Limiting investment opportunities
Cost reduction > Control
Customers demand order accuracy
, excellent service and timely
delivery

FOURTH PARTY LOGISTICS (4 PL)

A 4PL is an integrator that assembles the resources, capabilities and technology

of its own organization and other organizations to design, build and run
comprehensive supply chain solutions.
It serve as consultants who manage the relationship between the principal
company and one or more 3PLs to make sure all operations are running smoothly
Examples :- IBM, Dell, Nike and Philips
Carry various responsibilities Order compilation and dispatch planning

In-transit monitoring

Physical transportation

Confirmation of deliveries

Providing MIS to the client.

Payment to transporters

FOURTH PARTY LOGISTICS (4 PL)

Some of the Indian
conglomerates extended their
business to third & forth party
logistics
4PL
Future Group

Tata

Reliance

TVS
Mahindra

Examples
- Anderson group as 4PL for Thames
water in U.K
- Vector, 4PL for General Motors in
U.S

TYPES OF 4PL
Synergy Plus operating
model

Solution Integrator model

Industry Innovator model

- Partnership between
4PL 3PL to market
supply chain solutions
- Capabilities and
market reach of both
partners are combined

- 4PL operates
comprehensive supply
chain solutions for a
single client
- Solution encompasses
resources, capabilities
and technology of the
4PL with
complementary service
providers

- 4PL develops and runs

a supply chain solution
for multiple industry
players with focus on
synchronization and
collaboration
- This model provides
the greatest benefits,
however it is complex

WHY MOVE TO 4PL ??

Effective
transport
along with an
entire
distribution
system

High reliability

Transparency

Quality

3PLs adopt a scientific approach to logistics, to

optimize cost and improve service levels and
response

4PLs facilitate single-point reference

Efficiency

For all
logistics
needs
Possess knowledge of
logistics to obtain most
efficient and effective
solutions

Have manpower
resources of higher
quality to supervise
vendors

An IT base to
network customer
systems
Ensure continuous
process

WHY MOVE TO 4PL

4PL manages a comprehensive supply chain solution for a client, which is crucial

for companies looking to reducing cost.

Many IT firms abroad solely rely on 4PL IT systems that cover inventory
management and billing accounts receivable as well as sales accounts
4PL may be an established business partner elsewhere in the world or in a

previous business of the company and, hence, is seen as being more reliable and
credible, especially if a company is entering new markets
4PL takes advantage of local cost efficiencies at each location while at the same

time administering it overall.

Since their scope covers the entire country, there is economy of scale.