Answer to Question #316044 in Management for cessy

Question

• What are the differences between 3PL AND 4PL?
• Discuss the functions of 3 PL and 4 PL in logistics management in relation to the points you have mentioned in

Answer 1

Differences between 3PL AND 4PL

• 4PL handles the entire supply chain, while a 3PL focuses on logistics. 
• 4PL providers are better for medium-to-large businesses, while 3PL providers are more suitable for small-to-medium businesses.
• 4PL providers function at the optimization and integration level while 3PL providers focus more on daily operations.
• 4PL providers may own assets like trucks and warehouses while 3PL providers generally don’t own these assets.
• 4PL companies can effectively coordinate the activities of 3PL providers.
• 4PL providers provide the highest level of logistics services for a great value while 3PL providers are more focused on one-off transactions.
• 4PL providers maintain a single point of contact for every business’ supply chain while with 3PL providers, businesses often need to manage certain aspects of the supply process internally.

Functions of 3 PL and 4 PL in logistics management 

3PL perform functions like warehousing, distribution, transportation, inventory management and fulfilment services to customers. These customers outsource these types of operations to the 3PL business and rely on the 3PL provider to offer end-to-end management of specific services.

The 4PL service provider manages all necessary logistics activities for a company, including third party logistics 3PL management. 4PL is responsible for daily management at the operational level and the company is responsible for international management at the strategic level