What is a 3PL? a 4PL? a 5PL?

What is a 3PL?

So, what is a 3PL?  That’s a great question.  3PL stands for “Third Party Logistics.”  Instead of writing an explanation, I took the easy route and found a quick video that explains it beautifully.    

Nice job Jess Genet at Lumi

https://youtu.be/eCgHcLoOE8Y   https://youtu.be/eCgHcLoOE8Y

What is a 4PL?

Hmmm…  then what is a 4PL?   Well, we saw that a 3PL is primarily focused on foundational logistics, warehousing and distribution activities.  “4PL” stands for “Fourth Party Logistics.”  A 4PL takes 3PL expertise and marries it with additional competencies and offers services that go deeper into the supply chain, such as:

  • Specialized services:
    • Distribution network analysis and design (outbound only)
    • Full Supply Chain network analysis (inbound and outbound)
    • Assisting with highly regulated supply chain requirements (e.g., USDA, FDA, DoD, etc.)
    • Global Trade Compliance for imports and exports
    • Management of inbound, outbound, reverse and circular logistics
    • Chain of Custody / Track & Trace
    • Kitting, light assembly, final configuration, custom packaging and other value-added services
  • Analytics / Metrics:
    • Carrier performance
    • Supply chain cost elements
    • Supply chain velocity
    • Detailed KPI’s (Key Performance Indicators)
    • Scorecards
  • Strategies related to:
    • Warehouse and Forward Stocking Location positioning
    • Transportation / Freight
    • Inventory investment, stocking levels and profiling
  • Highly technical systems and integrations including:
    • WMS (Warehouse Management System)
    • QMS (Quality Management System)
    • TMS (Transportation Management System)
    • EDI (Electronic Data Interchange)
    • API’s (Application Programming Interface)
    • eCommerce systems (e.g., Shopify, Amazon, etc.)
    • Device integration (RF guns / Bar-code scanners, wedge scanners, scales, tablets, passive RFID encoding & reading, printers, asset tags, picking systems (ASRS), GPS, temperature monitoring, humidity monitoring, Material Handling Equipment (MHE), etc.
    • Web Portal / Visibility

4PL’s tend to be very agility and very adaptable.  They react to market changes and customer needs rapidly and are providers of customizable solutions.  4PL’s are generally experts in “Lean” methods and are focused on rigorous, systematized continuous improvement.

To summarize, a 4PL solution is one that encompasses more of the “links” in supply chain.  Using a 4PL provider like Spearpoint Logistics lets us focus on your logistics needs… so you can focus on your business.

What is a 5PL?

Okay – it seems like 4PL providers have it all covered, what’s this 5PL stuff about?

Following the naming convention logic, “5PL”, means “Fifth-Party Logistics.”   A 5PL provider supplies innovative logistics solutions and develops an optimum supply chain network.  These are forward thinkers, strategically adopting new technologies.  For a logistics guy like me, this is really cool stuff!  We research new technologies in an effort to even further increase efficiencies and derive value from the beginning of the supply chain to the end.  This is accomplished through the use of technology like blockchain, automation, robotics, integrated beacons, and active RFID devices.

A Fifth Party Logistics solution applies when the model evolves for that of a “supply chain” to a “supply network.”  5PL’s are experts in strategic, innovative supply network solutions and concepts.

But wait – there’s more!

3PL, 4PL and 5PL, what else is there?  Well, there are even articles relating to 6PL, 7PL, 8PL and beyond.  How may “PL’s” can there possibly be?   I think it’s getting a little ridiculous.  At Spearpoint, we are opting for the term “Supply Network Services” which includes all of the “PL’s”…  or all of the services they seem to provide. 

It’s perhaps better thought of as an evolution to a holistic, sometimes circular, fully integrated supply network.  Taking goods from their origins to the use, to the return, through recycling / remanufacturing and on to re-use.

By working with an expert Supply Network Services company such as Spearpoint Logistics, your company focuses its efforts and resources on its core competency (R&D, Engineering, Manufacturing, Procurement, Etc.) while Spearpoint manages the supply network.

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