3PL or 4PL: Which One Should You Use?
What is the deal with all these PL’s, anyways? This month we’re continuing our “3PL or” series and exploring the differences between 3PL (third party logistics) and 4PL (fourth party logistics) providers.
Last month we blogged about the difference between a 3PL and freight broker. We stated that 3PL companies invest in relationships to drive their business strategy. In contrast to the freight broker, this strategy is similar to that of the 4PL. Because 3PL and 4PL providers are similar, we turned to the Council of Supply Chain Management Professionals’ (CSCMP) glossary of terms to academically define both providers.
According to the CSCMP glossary, a 3PL is “a person who solely receives, holds, or otherwise transports a consumer product in the ordinary course of business but who does not take title to the product.” A 3PL outsources a client’s logistics operations to specialized companies. The main services a 3PL offer are:
- Inventory management
- Freight forwarding
Additionally, a 3PL provider is defined as a company which provides multiple logistics services (as listed above) for use by their customers. 3PL companies facilitate the movement of parts and materials from point A to point B.
3PL or 4PL?
A 4PL differs from the 3PL in that it often manages all of a client’s supply chain instead of specific services as a 3PL does. Yet, it is possible for a 3PL to form a 4PL within its company structure. This means a 3PL can offer supply chain management as a 4PL does as a “service provider [that] delivers a comprehensive supply chain solution,” according to CSCMP.
Powerline is a…
First and foremost, we are a 3PL. As a non-asset based logistics provider, we outsource logistics services to succeed in shipping a client’s freight. Yet, we also provide 4PL services in regards to supply chain management and consulting. So, it is fitting to argue we are somewhere between a 3PL and 4PL and therefore are able to meet client needs in both areas! For more on our services, we encourage you to go here.