Learning the difference between a Third Party Logistics (3PL) and Fourth Party Logistics (4PL) as well as 1PL, 2PL, and the rise of even Fifth Party Logistics (5PLs) is both confusing and highly debated among those in the supply chain industry. While each layer of a logistics provider serves a specific purpose, it's important to remember that there are varying degrees of expertise and capabilities among each. What exactly defines a 3PL? A third party logistics company is one that manages another company's logistics operations department. 3PL is the action of outsourcing all or much of a company's logistics operations to a specialized company. For instance, Spartan Logistics provides its customers with turnkey 3PL services- warehousing, cross-docking, inventory management, fulfillment, and transportation services. In 2008 legislation passed declaring that the legal definition of a 3PL is "A person who solely receives, holds, or otherwise transports a consumer product in the ordinary course of business, but who does not take title to the product." We 3PL's have a large footprint throughout the country. This makes it viable to service clients in remote regions at a much lower cost than doing it themselves. 3PL's tend to "walk the extra mile" to accommodate many of the responsibilities that would assume a 4PL's role ultimately. What exactly defines a 4PL? The concept of a 4PL provider is an integrator that accumulates resources, capabilities and technologies to run complete supply chain solutions. A 4PL company takes over the logistics section of a business, managing the entire process, and at times, the 3PL. An example here would be an appliance importer-The main function is to import appliances. However, they need to have spare parts (fans, motors, etc.) for these appliances-a 4PL would manage the total logistic operations for the spare parts business. Ok, so what about all the other "PLs?
Common 3pl Questions