3PL vs. 4PL: What’s the difference & why you should care

Dwight D. Eisenhower – Supreme Commander of Allied Forces in Europe during the Second World War and later US President – famously dismissed the value of a vision without the underlying infrastructure: “I have always found that plans are useless, but planning is indispensable.”

Entrepreneurial success begins with a business that makes a great product (the first party) and customers who want it (the second party). But too much success leads to logistical challenges that can undermine that success. Enter third-party logistics (3PL). What is 3PL? The short answer is outsourced logistics services, such as warehouse management and freight transportation services. 3PLs with the right expertise can even handle procurement, freight consolidation, packaging, and customs brokerage for cross-border sales. 3PL takes the pressure off your business, freeing you up to focus on what you do best.

But if your business continues to thrive, you may find yourself working with many different 3PLs. Most global companies understand this. They manage multiple business units, partners, and service providers to ensure success. This is where fourth-party logistics (4PL) comes in. What is 4PL? Also known as a lead logistics provider (LLP), a 4PL provider coordinates all the moving parts. 4PL providers act as top-level supply chain strategists, managing everything from resources to technology to infrastructure. Critically, 4PLs are the single point of contact for both the customers they ultimately serve and the 3PL providers they directly manage.

Benefits of 4PL for enterprise logistics

As a business grows and thrives, the number of 3PL players critical to its success also rises. This makes communication and coordination increasingly burdensome and can even lead to inconsistent customer outcomes depending on which 3PL provider fulfills a given order. This is when medium-sized and larger enterprises typically turn to a 4PL provider.

If you think of 3PL as the logistics arm of an SMB, then 4PL is the logistics brain of a large enterprise. 4PL providers are end-to-end strategists managing and controlling the myriad activities within a supply chain network. A good 4PL offers a single interface for data consolidated from multiple 3PLs and a single point of contact for communications throughout the supply chain. Industry leaders use a sophisticated control tower solution offering the appropriate visibility to each supply chain player, from suppliers and manufacturers to shippers and end customers. This can give larger enterprises the competitive advantage to meet challenging customer needs, such as repeatedly delivering on-time and in-full.

Hiring 3PL and 4PL providers means handing over control of your product logistics to other parties. That’s why it’s so important to choose 3PL and 4PL partners carefully: After all, customers don’t care how your product reaches them, they only care about getting their order on time, and any missteps will impact your reputation alone.

3PL solutions like DHL Fulfillment let you focus on the great products that made you successful in the first place while the experts handle the logistics. Here are some of the benefits:

• Integration: Modern fulfillment centers are complex, high-tech places. State-of-the-art 3PL facilities have everything you need for successful customer logistics in one place for greater efficiency and a smaller environmental footprint.
• Customization: Today’s customers are no longer satisfied with a one-size-fits-all approach. 3PLs are set up to incorporate last-minute changes, reconfigurations, and personalization just before transport.
• Scalability: 3PLs have the agility to deal with seasonal fluctuations, sudden growth, and unexpected disruptions so that your customers don’t feel the impact.
• End-to-end packaging concepts: Your product never gets a second chance to make a first impression. So packaging counts – whether you’re shipping shelf-ready displays to retailers or memorable unboxing experiences to end customers.
• Sustainability: Today’s customers are increasingly unwilling to accept wasteful, excessive, unsustainable packaging. They’re even willing to pay more for sustainability! Leverage 3PL capabilities to give customers what they want and do right by the planet.

4PL solutions like DHL Lead Logistics Partner can transform your business, leveraging expertise and digital tools to design, manage, operate, and continually improve your supply chain. The benefits include: