Rise of the 4PL

Mar 17, 2009

It takes more than strategy to implement supply chain optimization.

Lead logistics providers–logistics providers who manage other logistics providers–are the general contractors of the logistics world. You don’t always need a 4PL, but when logistics become overly complex or too expensive or a non-core competency to shed, the 4PL function can bring depth and unique expertise to process. And, as companies struggle to find a new fiscal equilibrium in the downturn, there’s a good value proposition for consolidating the management of that process in the hands of a 4PL.

In today’s constrained economy, as senior management increasingly eyes supply chain operations as a key enterprise driver, shippers are turning to 4PLs to find more creative ways to accomplish their goals. Optimizing the supply chain is a common first step, but their continued value lies in managing relationships and infrastructure, standardizing metrics for reporting and analysis, and pushing innovation through best practices. “4PLs take a purely collaborative approach,” explains Eric Bond, president of the 3PL Mach 1 Global Services. “There are millions of great ideas wasting away in consultants’ PowerPoint presentations because the company was too busy to do further analysis or didn’t have the funds to implement them.” 4PLs, however, have the capabilities to identify the most effective of those ideas and implement them.

Although the 4PL can add an extra operational layer to an organization’s business model, customers say it more than pays for itself in cost savings and efficiency.

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