It remains lucid managers are confused about the 4PL, LLP, and Logistics Integrator terminology as well as the potential benefits from these relationships. Whilst the traditional focal point has been on the organisation of assets such as facilities, vehicles, and inventory, the shift for 4PL and Logistics Integrators is toward the collection, coordination, and management of information leaving asset management for the 3PLs.
Under this business model, the fourth party would not have to be a third party logistics company, but could be say a consulting firm or an information technology company. In contrast, an LLP provider would be a 3PL service provider currently used by the client, who is designated to manage certain aspects of the client’s relationships with the other 3PL providers.
4PL providers become a partner to their clients and must continue to add value. Frequently, the process of implementing supply chain solutions involves changing culture within a company, and has to be tackled in stages.
A 4PL solution leverages the combined capabilities of both management consulting and third party logistics providers. More importantly, the design, implementation and execution of a leading edge, client optimised, uniform technology plan that will meet the needs of the 4PL client is ensured by leveraging the technology capabilities of consultancies, technology providers and third party logistics providers.
A 4PL implements recommendations including business process realignment, systems integration of technology across the client organisations and service providers, and transition of operations to the 4PL delivery team. Careful attention is paid to organisational change, recognizing that the "people" factor is a critical driver of success in the transition to the 4PL arrangement.
The goal is to avoid the all too common, ineffective implementation of well-designed strategies and business processes that have limited the effectiveness of solutions and the delivery of projected results.
A 4PL provider takes on operational responsibility for multiple supply chain functions and processes. The scope goes well beyond traditional third party transportation management and warehouse operations to include: manufacturing, procurement, supply chain IT, demand forecasting, network management, customer service management, inventory management, and administration. While an organization can outsource the entire range of its supply chain activities to a 4PL provider, a 4PL solution will more likely be a subset of critical path supply chain functions or processes.
Companies offering 4PL, or lead logistics services, include Schneider Logistics, Exel, UPS Logistics and Ryder Logistics. "I hate the term 4PL. I even hate the term 3PL," said Gregory Swienton, Ryder's chief executive. "We say 'lead logistics.' I think of what we do as acting as a supply-chain manager." Ryder is acting as a lead-logistics provider to several customers, but Swienton would give no names, and the company has not yet "gone to market" with a 4PL package.
In addition, several 3PLs are planning to enter the 4PL field. Consulting firms also are interested; the term 4PL was coined by Accenture several years ago when it was still Andersen Consulting, which considered trademarking or copyrighting the term but never did so. Alex Brand, an analyst with BB&T Capital Markets, said 4PLs essentially will be a consultant that figure out ways to make the logistics process more efficient. Brand is suspicious, however, of consulting firms "that are trying to become 4PLs out of the box. I think the best 4PLs will be the really efficient 3PLs," he said.
Bill Copacino, an Accenture partner who heads the consulting firm's supply-chain management practice, defines 4PL as a partnership that offers "distinct capabilities to customers above and beyond what any single 3PL or consulting firm can provide." The notion, he said, is "one and one makes three."
Whereas, CNF spokesman Jim Allen says Vector will become the manager of all 3PLs that work for GM around the world. "The definition of a 4PL is to manage 3PLs. It adds a lot more value, primarily from the technology side," he said. The venture's main focus has been to improve GM's visibility of its supply chain through technology.
Upon reviewing the above, it seems to appear a true 4PL providers must be totally self-governing and cannot own assets such as warehouses or vehicles. The 4PL provider has to manage the outcome of the supply chain by utilizing the best and most appropriate resources available. The eyefortransport 3PL Summitwill bring together over 150 senior executives from leading Logistics Providers to discuss the most important issues facing the industry.
Reproduced with permission from eyes for transport
