Cost Optimisation

The Role of 4PLs in Modern Supply Chain Data Management

October 20, 2023

Managing how products move from one place to another is critical for building a competitive supply chain edge. As companies look for more options that offer better ways to handle their supply chains, 4PLs, or Fourth Party Logistics Providers, are becoming more popular. A forecast that confirms this popularity is that the worldwide 4PL Logistics market is projected to surpass USD 104.54 billion by 2031, with an expected growth rate of 8.18% between 2023 and 2031.

But what are 4PLs exactly? Are they better than 3PLs, and how are they different than other providers? As 4PLs grow in importance in global supply chains, we will discuss all these details and more about them. 

What is a 4PL?

A 4PL, or Fourth Party Logistics Provider, is an entity that acts as a manager for your entire supply chain. Instead of just handling one task, they oversee everything, ensuring all parts of the supply chain work well together.

You might have heard of 3PLs or Third Party Logistics Providers. They handle specific tasks like transporting goods or storing them in warehouses. But 4PLs do more than that. The 4PL provider handles all logistics tasks for a client, collaborating with different 3PL providers and partners to ensure the supply chain runs smoothly and efficiently.

4PLs look at the bigger picture, managing all ends of the supply chain. They play a more prominent role in supply chain ownership, helping businesses plan and solve problems.

How 4PLs Stand Out from Other Providers

In managing supply chains, there are many players involved. But 4PLs have a special place in this setup. Unlike other providers focusing on just one operation, 4PLs look at end-to-end logistics. This all-in-one approach makes things simpler and more efficient for businesses.

Here is a quick comparison of how other providers fare against 4PLs on different parameters:

  1. Scope of Work
  • Other Providers: Concentrate mainly on specific logistics tasks, such as warehousing or transportation.
  • 4PLs: Oversee the end-to-end logistics from fulfillment and transportation to technology using their advanced solutions and tech.
  1. Nature of Relationship
  • Other Providers: Relationships are often transactional, centered around specific tasks or services.
  • 4PLs: Foster a strategic, long-term partnership. 4PLs identify supply chain challenges and advise on holistic improvements.
  1. Assets
  • Other Providers: Possess tangible assets like trucks, warehouses, and equipment necessary for their specific services.
  • 4PLs: Intangible assets such as software, SaaS, IT systems, and industry expertise.
  1. Cost Efficiency
  • Other Providers: Utilize their specific resources and industry connections to offer cost-effective solutions for their services.
  • 4PLs: Aim to streamline the entire supply chain, employing broad strategies to save costs across all aspects of logistics.
  1. Communication
  • Other Providers: Direct communication, often task-specific, focusing on the service they provide.
  • 4PLs: Act as the primary point of contact for all supply chain matters, ensuring a unified approach.
While 4PLs and other logistics providers both play essential roles in supply chain management, their focus, assets, and approach differ considerably. Choosing between them depends on a business's overarching needs and long-term goals.

4PLs and Data Management

In logistics and supply chain, data has become a big deal today. It gives information that helps companies make the right decisions and better predict future trends. 4PLs understand this. Hence, 4PLs don't just collect data but also collect, study, understand, and use it to strengthen businesses continuously.

By pulling data from different parts of the supply chain and putting it together, 4PLs can see the complete picture. They can spot problem areas, find opportunities, and even predict future challenges quicker than regular businesses working with only 3PLs can do. This deep dive into data means 4PLs can make smarter and faster decisions. In logistics, this sharper approach to data can make all the difference.

Holocene's Synergy with the 4PL Approach

4PLs manage and oversee the entire supply chain, and tools like Holocene make their job easier. Holocene offers tools and features that fit perfectly with what 4PLs do. Holocene's platform is designed to automate supply chain processes and give businesses a clear view of their supply chain, making it easier to spot problems and find solutions.

With time-saving automation and real-time data for visibility, 4PLs can quickly get the information they need. It helps businesses make decisions faster and with more confidence. 4PLs set the strategy, and Holocene provides the tools to make it happen. Want to see how it works? Contact us today and schedule your demo