Third-party logistics is the most common and well-known service. However, 3PL, 4PL and 5PL are becoming more prominent in supply chains. Here's everything you need to know to understand 1PL, 2PL, 3PL, 4PL, 5PL.
3PL can help companies at any stage of their supply chain, usually by offering an integrated logistics solution that covers a number of services, including but not limited to:
- Freight forwarding
- Customs procedures
- Inventory Management
- Sea transportation
- Air freight
- Export packing
- Returns management
In essence, a 3PL
acts as your company's logistics department, saving the time, nerves and costs associated with managing the entire process internally. Alternatively, a company may turn to a 3PL after a merger or acquisition when its supply chain becomes too complex to manage internally.4PL (fourth-party logistics)
is a more advanced form of supply chain management, focused on optimizing the entire logistics function rather than delivering individual parts.
Using 4PL can be an attractive option for companies whose supply chain is complex and geographically far. With a broader understanding of the supply chain and the technologies that can improve it, 4PL can have a good opportunity to improve supply chain efficiency.5PL (fifth-party logistics)
has emerged more recently than 3PL and 4PL, with the concept open to different interpretations. Typically, however, a 5PL provider will move beyond individual supply chains, instead focusing on broader supply networks.
A 5PL will plan, organize and implement a customer's logistics solutions, taking all elements of supply chain management out of their hands. Their focus on supply networks means they will control every supply chain in the organization.
As most 5PLs specialize in big data and use technology to improve efficiency, they tend to be more valuable to e-commerce businesses than companies with a conventional presence. Other technologies that 5PLs can use include robotics, blockchain, artificial intelligence (AI) and Bluetooth beacons.
The decision of whether to use 3PL, 4PL or 5PL will mostly depend on the needs of your business and whether you have the ability to manage your logistics internally.
At Hecny Group, we offer experience and a wide range of services to work as your integrated logistics partner on a 2PL, 3PL, 4PL or 5PL basis. Acting as an outsourced logistics department for many high-profile clients in various sectors, we pride ourselves on providing reliable, professional and cost-effective services.