6PL of The Advancement of Party Logistics
Articles and Information from the world of International Logistics and Supply Chain management
Sep 4, 2023, 19:39 IST|
Many people involved with logistics will have heard of the term ‘third party logistics’ or ‘3PL’ or ‘TPL’ but what are the others? There are actually several forms of ‘party logistics’ – here I will cover 1PL to 6PL and show how the systems integrate the supply chain. The more a company moves from 1PL to 6PL (and beyond) the more of the company supply chain managed by outsourced companies and the higher the level of service integration
1PL: 1st Party Logistics
What is 1PL? 1PL refers to a company or individual that transports and delivers their own goods, using their own vehicles. There will be no other companies involved in any way for the movement of the goods. For example: a manufacturer makes tools and delivers the tools on their own vehicles directly to shops for sale. Everything is done ‘in-house’.
2PL: 2nd Party Logistics
What is 2PL? Probably the one we are all most familiar with, if not the term itself. A 2PL solution involves a company using a separate transport company, a subcontractor, to move their goods. A 2PL logistics provider will be ‘asset-based’ and will own the means of transport. This would have been the first concept of ‘a man in a van’ as an individual or company transports other companies goods in their vehicles.
3PL: 3rd Party Logistics
What is 3PL? 3PL was first used in the early 1970’s to identify intermodal marketing companies in transportation contracts. Now 3PL is the first solution that includes outsourcing part of the supply chain. A 3PL logistics provider will offer first stage supply chain integration in the forms of:
Transport and freight forwarding
Warehousing including inventory management and cross docking
Packaging and labelling
So, a manufacturer can outsource all their transport, storage, packing and distribution of their goods using a single 3PL company. Most 3PL companies are flexible so that you can select to use as many or as few of their services depending on your requirements.
4PL: 4th Party Logistics
What is 4PL? The 4th Party Logistics solution involves an independent, or ‘neutral’ lead logistics provider, effectively acting as an agent. A 4PL company will liaise and co-ordinate with one, or more, 3PL provider companies in order to provide and tailor the best service for the customers requirements. Therefore 4PL will include all the benefits of 3PL providers but also include:
Project Management, sourcing and negotiation
Logistics strategy and analytics
Impartial service advice
A single point of contact