What is 4PL?
4PL, or Fourth-party Logistics, also called Lead Logistics Provider (LLP), is the logistics service where an external organization or service provider manages all the facets of the supply chain. 4PLs also monitor and look after the operations of the 3PLs (Third-party Logistics).
Significance of 4PL in E-commerce
A 4PL manages, strategizes, and streamlines the supply chain operations to facilitate inventory management, distribution, and activities like sales, marketing, procurement, and so on. Here are its key benefits:
- Minimization of complexity in the supply chain
4PL offers greater visibility since the provider is the sole interface connecting you with multiple 3PL providers and suppliers. This structured process reduces the hassles of coordinating with multiple interfaces and the complexities associated with each.
- Accurate data analysis
Advanced data analysis software and applications play a vital role in ascertaining accurate information. This helps to avert unnecessary delays and operational flaws in the supply chain.
- Optimization of resources
Cost cutting is one of the greatest advantages of opting for fourth-party logistics. Operational costs are saved, and cash flow is enhanced due to operational efficiency. The time and effort saved in the process can also be utilized in the core operations of your business.
How Does 4PL Work?
4PL solutions offer a complete and accurate picture of all the operations of the supply chain as it continuously carries out the logistical activities and supply chain management. A 4PL provider helps in
- Developing logistics strategy
- Bundling, drop shipping, and packaging
- Freight strategy fulfillment
- Managing outbound, inbound, and reverse logistics
- Inventory planning
Use Case with 4PL
For instance, a bookstore owner intends to expand outreach by catering to a wider customer base. The seller may not want to invest time and effort in distribution or marketing but rather concentrate on increasing publication. To optimize the entire process, the seller may partner with a 4PL provider to manage the supply chain and take charge of all logistical operations.