As an online seller you have to make more than a few decisions. Right from deciding which products to sell to choosing the best platform, finding the right courier and more. However, one of the toughest decisions can be deciding whether to ship the parcels all by yourself, or outsource them to a service provider. While many businesses choose the former, others are caught between 3PL vs 4PL dilemma.
When it comes to outsourcing to your shipments, both 3PL and 4PL services come in the picture. You might have heard about these in the market. Even though you know a few flying things, the situation is different when you actually have to make a decision for your business.
3PL vs 4PL is also a debate that has been going on for a while now. And that’s because of the popularity of these services. Whichever you choose, it is imperative to remember that outsourcing your business’ logistics can have more than a few benefits for your online selling process.
Before we get to finally understanding which out of 3PL vs 4PL makes an excellent choice for your business, let’s take a look at why your online business might need PLs at all.
Why PLs, Anyway?
Outsourcing your logistics can have more than a few benefits for your business. Even though it seems tempting that you do all by yourself when you’re selling online, it’s often more practical the other way.
When you outsource your business’ logistics, you get to prepare yourself better. You are left free to think and put to action a lot more things.
Party logistics are basically companies that help in shipping orders in eCommerce. It could be 1PL or 2Pl depending upon whether you’re fulfilling the orders yourself. SImilarly, when these services are outsourced, they are better termed as 3PL or 4PL.
Here are a few other reasons why outsourcing logistics can be a good idea for your business-
- Outsourcing your business’ logistics gives you the freedom of decision making. You can implement more strategies for your business than ever before
- Save yourself time that would have been otherwise wasted in taking care of every little detail while shipping
- Hiring a professional logistics company can help you make fewer mistakes when shipping your orders. 3PLs and 4PLs are excellent in what they do- they simplify shipping for you.
- Provide an unparalleled level of customer satisfaction. While you can’t run the world alone, 3PLs and 4PLs help you provide an unparalleled level of experience to your customers. This way you can participate in the market trends and provide customers value even if you are just starting in the market.
- One of the best benefits whether you choose 3PL vs 4PL comes from the cost optimization. As an online seller you’d want to cut down on your costs and increase your profit margins. By outsourcing your logistics, you can ship at lower rates with the same courier companies than you’d do individually.
3PL and 4PL services
The 3PL model is the model where manufacturers take an overview of the supply chain, but transportation and logistics operations are outsourced to a 3PL provider. 3PL or Third-party logistics is similar to 4PL in many ways.
Some of the services rendered by 3PL are Proper management of inventory and storage, freight forwarding, management of the contract, packing and packaging of goods, customs brokerage, IT solutions.
Third-party logistics providers are one of the intermediaries between the manufacturer and you(seller). It is efficient, which saves time and money and is excellent for local and international distribution. Apart from this, 3PL services are affordable for small businesses with fast-growing orders. Also, it can have control over the returns.
Furthermore, it has a responsive logistic model, and it is highly decentralized, which reduces the risk. But it also entails some disadvantages like it has less control over the inventory and it is expensive if the orders are low. It should be noted that it is generally suitable for small to medium businesses only.
Not only but it has limited control over customer fulfillment and experience also. The service provider does not take ownership of the products or goods shipped as 3PL providers or companies only act as managers between the manufacturers and you (seller).
4PL providers provide a high-level supply chain management to its customers. Well, it is tough to choose for the businesses, whether to go for 3PL or 4PL, and how they can optimize their supply change management.
For example, under the 4PL model, the manufacturer outsources the whole supply chain such as logistics, packaging, warehousing, and delivering products to a retailer to a 4PL company. Subsequently, the 4PL company takes control of entirely logistic operations for the manufacturing companies.
Some services which are provided by the 4PL logistics company are Consultancy and logistics strategy, freight sourcing strategies. Apart from this, it includes analysis of transportation expenses and analysis of career performance. Moreover, it manages third-party logistics effectively.
4PL has unique and professional operational support, which effectively outsourcing all logistic needs given by a business. It offers a single point of contact for the parties which are involved in the supply chain. Not only but also provide more sense of control and ownership over business.
It creates a lean and cost-effective supply chain for improved profit margin, which helps the manufacturers focus on their product by outsourcing all logistics to 4PL or 3PL services.
Although it also includes some disadvantages like it has minimum control over the logistics process and fulfillment. It could be cost-prohibitive for startups and small businesses.
Differences Between 4PL and 3PL
The main difference between the 3PL and 4PL services is that 3PL services are mainly concerned with handling the logistical process, and 4PL handles the entire supply chain.
Difference between the 4PL and 3PL is based on their fundamental differences which include:-
4PL Mainly suits medium and large businesses, and 3PL is most suitable for small and medium-sized businesses or startups. When it comes to optimization and integration, fourth party functions on it and third party focus on daily operations.
3PL service providers do not own assets, but 4PL service providers own assets like trucks warehouses.
4PL companies can effectively coordinate the activities of 3PL providers.3PL mainly focused on one-off transactions, while the 4PL providers provide high logistical services for more excellent value.
3PL and 4PL by Industry
3PL helps the medical devices company develop a system that optimizes delivery from distributor hub to individual locations. The 3PL creates visibility to consolidate deliveries, which significantly reduces the cost.
To fulfill the delivery in time, 3PL can manage expedited shipments for high-value items such as knee imPLants. The 3PL has greater visibility to the inventory and reserved logistics. This improves its auditing and reduces the need for physical auditing.
3PL for field services mostly develop the database for most often ordered items. This ensures that the inventory is managed to meet ongoing demand. The high level of customer satisfaction is guaranteed. This is especially when the right part is available to the service technician as they make initial calls.
For retail, 3PL can develop a strategy that improves supply chain discipline. This can help you to compete better with other companies at shipping times and fulfillment accuracy.
In 4PL for medical devices, Sometimes surgeon orders of the medical device such as knee replacement only focus on just in time delivery. Surgeons don’t know about the size, so they may order several sizes of products to start the procedure. Here the 4PL can manage delivery schedules to meet the requirements and reduce inventory cost by addressing the complex chain of custody requirements.
In 4PL for Field service, 4PL takes control of the supPLy chain to serve field services, including warehousing, transportation, fulfillment, and technology.
In 4PL for retail, 4PL offers a strategic vision that helps create a new supply chain network that can efficiently manage all the products’ flow across all the Platforms. A single inventory view gives you the power to allocate the inventory without wasting the inventory’s time or location.
The simple idea behind choosing 3PL vs 4PL is to analyze your requirements. Are you just a small business selling only a handful of orders in a day? Or are you someone who has been in the market, but need an extra push to gain a competitive edge among your contenders?
Whichever bracket you fall into, you can always outsource shipping to a 3PL or 4PL.
One of the best platforms that can help you outsource your shipping is Dash101. It can help you ship with multiple partners at rates starting at Rs 23 per 500 grams. If you find this interesting and would like to save on your business costs without compromising on your delivery experience, reach out to us. We’ll help you decide the best out of 3PL vs 4PL!
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