The explosion of e-commerce platforms and the need for a globalized market make supply chain optimization has led to heavy dependence on logistics services. Outsourcing logistics has become a key strategy for small and medium-scale businesses to drive their logistic operations smoothly. However, it is equally important to invest in the right logistic service, able to meet the specific demands of their businesses. Most of the entrepreneurs stay confused on whether to go for 3PL or 4PL logistics. Though they may look similar on the surface, both services are curated for different business types. Read this blog to learn more about What’s the Difference Between a 3PL and a 4PL Provider?
Learning about the difference between 3PL and 4PL logistics will help you make an informed choice for managing the supply chain management of your business. This blog will also explore the key factors businesses should consider when choosing the right partner for logistics services. It will empower them to optimize their supply chain and drive business growth.
3PL Vs 4PL What is the Main Difference?
3PL and 4PL are the two most common choices that business owners come across. While 3PL is more common, both services comprise fulfillment and e-commerce logistics services. Fourth-party logistics (4PL) providers also called lead logistics providers (LLPs) offer the same services as 3PL only having more accountability and responsibility in the process. In 4PL logistics, a business outsources the whole management and organization of its supply chain and logistics. The logistic service will include evaluation, design, construction, implementation, and measurement of the client’s business.
On the other hand, 3PL or third-party logistics is about the management of all the administration services including warehouses and inventories, order fulfillment, shipping arrangements, retail distribution, exchanges, and returns. 3PL acts as an intermediary between your company and the carriers that deliver your products to customers. The 3PL model is similar to 4PL but their main area of concern is always the management of logistics and not the entire supply chain and organization.
An Elaborate Comparison Between the 3PL and 4PL Providers
Both 3PL and 4PL services involve managing the logistics and supply chain management, therefore, it is obvious to be puzzled by them. The key difference between these two services lies in their target areas and the assistance offered.
Each logistic service offers its own set of advantages and is suitable to meet the demands of various types of businesses. Therefore, to make an informed choice for your business type it is essential to know the differences between 3PL and 4PL logistics services. differences will tell you which logistic type is more suitable for your business and efficient. Take a look at the key differences between 3PL and 4PL logistics in the table given below:
| Key Point | 3PL Logistics | 4PL Logistics |
| Business Size | More suitable for small-to-medium businesses. | Better for medium-to-large businesses. |
| Point of Contact | Businesses often need to manage certain aspects of the supply process internally. | Maintains a single point of contact for every business’ supply chain. |
| Service Level | More focused on one-off transactions. | Provides the highest level of logistics services for a great value. |
| Asset Ownership | Generally doesn’t own assets like trucks and warehouses. | May own assets like trucks and warehouses. |
| Coordination | Provides coordination for daily operations. | Coordinates the activities of 3PL providers. |
| Focus | Focuses more on daily operations. | Operates at the optimization and integration level. |
| Supply Chain Optimisation | Only focus on the specific logistic functions | Involved in developing comprehensive supply chain strategies |
Key Factors for Choosing the Compatible Logistics Provider for You
Saying one logistic service is better than another is not accurate and does not help businesses make the right choice. Each business has its unique needs and requires different assistance from its logistic partner. You can consider a few factors that will help you make an informed choice for your decision. These factors are based on your business size and several other factors to make the right choice. Go through the list below to learn how you can choose between 3PL and 4PL service providers for your business.
Business Size: One of the main factors that should be considered while choosing between 3PL and 4PL services is the size of your business. Small businesses with simple supply chains shall go for 3PL and big-sized businesses are known to benefit more from 4PL services.
Geographical Reach: Based on the reach of your business you can choose the right logistic service. 3PL services are more suitable for regional areas, whereas 4PL services offer global coordination and management.
Budget-friendly: Cost is another factor that plays a major role in selecting the logistic service for your business. 3PL logistics is a more budget-friendly option than the 4PL services. You can choose a specific service based on your budget requirements.
Range of Services: The extent of services required by your business is also an essential factor to consider when choosing between 3PL and 4PL services. 3PL is concerned with the warehouses and logistics whereas 4PL offers more comprehensive services.
Final Takeaway
3PL and 4PL logistic services are curated to serve the diverse logistic demands of e-commerce and other businesses. With this blog, you will learn What’s the Difference Between a 3PL and a 4PL Provider and what are the factors you should consider while choosing between both. Choosing a suitable logistic service is crucial to meet the budget requirements and supply chain demands of any business.
