What Is a 4PL?

The transportation and logistics industry is complicated—there are many moving parts that need to be effectively managed in order to deliver goods to their intended destinations in a timely manner. Keep reading to learn more about how 4PL service providers are able to manage your entire supply chain operations and the significant benefits they supply your business.

4PL Outsourcing: A High-Tier Logistics Solution

The fourth-party logistics (4PL) business model allows companies to outsource their entire supply chain and logistics management. 4PL service providers, also called lead logistics providers (LLP), act as a singular touchpoint for a company’s entire supply chain operations. With rising consumer demand for same or next-day shipping, companies need to be able to operate with agility and efficiency to provide competitive shipping for their customer network.

How Does the 4PL Business Model Work?

4PL service providers manage your entire supply chain from start to finish. But they typically do not own any infrastructure or assets, such as warehouses or vehicles. Instead, they manage a network of 3PL companies to efficiently deliver cargo and shipments to their intended destinations while increasing transparency and visibility throughout the supply chain network.

As an example, suppose a retailer needs to deliver a shipment across the country, but their 3PL service provider only manages a select number of warehouses within their regional geographic area. A 4PL service provider is able to connect this local supply chain network with disparate 3PL networks and coordinate them so that the retailer can extend its range of operations. Your 4PL acts as the connective tissue between separate supply chains to create a seamless, interconnected shipping network.

Using Advanced Technologies To Deliver Shipments Efficiently

4PL service providers are independent organizations that assemble and manage resources, relationships, and technology for their clients to create an efficient fulfillment process. Logistics processes that are normally separate, like inventory management, packaging, warehousing, and distribution are combined under a 4PL using innovative transportation management system (TMS) software.

The transportation and logistics industry generates a large volume of data that can be hard to understand. TMS software is able to quickly and accurately make sense of it. Metrics such as freight spend, optimal shipping routes, fuel surcharges, and load optimization are integrated within the TMS software to increase visibility and efficiency. Your 4PL service provider leverages this technology to connect supply chains and improve your shipping capabilities.

Streamline Planning, Procurement, and Execution With Managed Transportation Services

To achieve an efficient supply chain for your business, you need a managed transportation partner that understands your shipping needs. Sheer Logistics provides comprehensive managed transportation services that improve visibility and business intelligence, allowing you to make informed decisions and focus on the core of your business.

Benefits of 4PL Supply Chain Management

Partnering with a 4PL service provider allows your company to optimize its supply chain through increased visibility, efficiency, and cost-effectiveness. It also significantly simplifies the process of supply chain management and customer service.

Data Visibility

The 4PL business model provides a control tower view of your supply chain operations, providing insight into processes like manufacturing, transportation, and logistics. Using TMS software, 4PL service providers provide your business with a comprehensive understanding of your operating model. They highlight internal inefficiencies and provide effective solutions for remediation. These services offer deeper insight into the way that your supply chain operates.

Reduced Complexity and Access to Logistics Experts

Partnering with a 4PL significantly reduces the complexity of your supply chain management. As mentioned earlier, your supply chain aggregates a lot of data, and that can quickly become overwhelming. Coordinating with multiple logistics companies to deliver goods efficiently can also be challenging. With a 4PL service provider as your single point of contact for your logistics operations, you can reap the benefits of an optimized supply chain without having to navigate it yourself.

4PL providers are also experts in the field of logistics, and they strive to provide you with continual solutions that address core inefficiencies within your supply chain network. Over time, their services help you establish a comprehensive, interconnected, and efficient supply chain that is resilient to market fluctuations.

Improved Operational Efficiency

The 4PL business model is designed to streamline your logistics operations, making them more communicative and efficient. It does this in a few ways, such as:

These services allow your business to provide rapid order fulfillment and respond to market changes with ease, allowing you to stay one step ahead of the competition.

Cost Savings

The 4PL business model is designed to streamline your operations and improve the cost effectiveness of your supply chain. By automating various processes, managing inventory, and connecting you with reliable carriers, 4PL service providers eliminate redundancies and improve cash flow.

As a result, your business can operate with lower overhead, providing an excellent opportunity for investment and growth.

Improved Customer Service

With a 4PL service provider managing your entire supply chain, you can focus more on innovation and customer service.

Customer demand for rapid order fulfillment is continually rising—people expect shipments in the blink of an eye. The increased efficiency provided by the 4PL business model allows you to improve the speed and accuracy of your shipping, which is what the end user wants.

Discover Your Supply Chain Solution With Sheer Logistics

Determining the best way to manage your supply chain can be challenging. Logistics is complex, and while some businesses may benefit from comprehensive managed services from a 4PL, others may require a narrower scope of services, such as freight brokerage.

Sheer Logistics is determined to provide customized logistics solutions that benefit the core of your business. Explore our supply chain blog to learn more about the difference between managed transportation and freight brokerage.