What is 4PL logistics? Definition and benefits
Outsourcing part or all of your e-commerce logistics is considered by many specialists to be an excellent strategy when you want to save time and optimize your company's profitability. And in many cases, this outsourcing involves what is known as 4PL logistics.
Find out more about the definition, advantages and implementation of outsourced logistics, which will enable your business to develop under the best possible conditions.
What is 4PL logistics?
A 4PL(Fourth Party Logistics) provider is an intermediary in charge of a company's entire logistics operation. Its aim is to manage and optimize the entire supply chain.
It acts as a single point of contact for its customers' logistics needs, managing all links in the chain (carriers, warehouses, after-sales service, etc.) and all stages (storage, preparation, dispatch, customer returns).
What are the differences between 3PL and 4PL logistics?
During your research, you may also have come across the term 3PL logistics (for Third Party Logistics), which is another type of service provider for outsourcing logistics. And the difference between 3PL and 4PL can sometimes be blurred. Let's take a look at the differences.
Different levels of outsourcing
Whereas a 3PL offers you partial outsourcing of your logistics, focusing on specific tasks, a 4PL offers you complete outsourcing, as its service encompasses the entire supply chain.
Execution versus optimization
A 3PL provider handles the execution of your supply chain, concentrating on day-to-day operational tasks. The advantage of a 4PL is that it's a strategic relationship, aimed at optimizing your logistics. It will know how to make the best providers and decisions according to your needs.
The relationship is therefore different. With a 3PL, the relationship is transactional, driven primarily by storage and delivery costs. With a 4PL, the relationship is partnership-based and long-term, guided by the optimization of your service.
A single point of contact
A 4PL acts as a single point of contact for all your logistics needs, for you and your customers. Acting as an intermediary between the various players involved in your logistics, it will be able to escalate your questions and needs to the right contacts. With a 3PL, you'll have several points of contact to manage, multiplying the back-and-forth on your side.
Available resources
3PLs often have their own fleet of carriers and warehouses. 4PLs don't usually manage any resources directly, but work with a network of partners. This enables them to have an objective view of a particular service provider, and to choose those who are best suited to your business.
What is the role of a 4PL logistics provider?
The role of a 4PL can be categorized into several points:
Managing and optimizing the supply chain
A 4PL coordinates and integrates all supply chain operations, while analyzing and optimizing the chain to improve efficiency, reduce costs and increase customer satisfaction.
Coordinate logistics partners
The 4PL is responsible for selecting and managing relationships with 3PL suppliers, as well as with other suppliers and partners. This includes negotiating contracts with logistics service providers, ensuring compliance and performance.
Providing strategic advice
In addition to operational matters, the Logistics Manager's role is to provide strategic advice to improve logistics operations in line with the company's business objectives. He supports his customers in their development by offering a flexible service, adapting to their growth or changing needs.
Providing state-of-the-art service
The 4PL uses advanced tools to track inventory and shipment data. It uses the analysis of this data to make more informed decisions, anticipate market trends and respond proactively to logistical challenges to avoid problems such as stock-outs.
What are the advantages of outsourcing logistics to a 4PL?
For a company wishing to outsource its warehousing and order dispatch, the 4PL model offers a number of advantages.
Valuable time savings
By connecting you to an entire network of logistics partners, 4PL means you don't have to deal with multiple service providers. This single point of contact enables you to monitor and manage your logistics efficiently. And you can easily refocus on your core business by delegating all those time-consuming tasks.
Lower logistics costs
Reducing your logistics costs by avoiding the need to invest in additional warehouses, equipment and personnel, and by not multiplying the number of external service providers is one of the major advantages of the 4PL, for which cost reduction is one of its objectives.
Greater logistics efficiency
Operators specializing in Fourth Party Logistics have the expertise and experience to optimally manage the storage, transport and distribution of your goods. As a result, your customers are delivered in the best possible conditions.
Flexible service
The high degree of flexibility offered by this operator increases your responsiveness to fluctuations in demand, which can occur, for example, during key shopping season events such as Sales and Black Friday.
How does the 4PL process work?
Let's take a look at how working with a 4PL provider works. Let's take the example of an e-commerce company, a sector for which 4PL is particularly well-suited.
1. Transporting your products
The 4PL coordinates the reception of your products, from the manufacturer or your premises, to one or more warehouses managed by a 3PL company.
2. Product storage
The 4PL manages the storage of your products, and keeps track of its stocks. During this stage, you will generally only be invoiced for the volume of products stored and the length of time they have been in stock, saving you money compared to renting your own warehouse.
3. Order picking
As soon as you receive a new order, whether from your e-commerce site, a marketplace (e.g. Rakuten) or another sales channel, it is transferred to the 4PL, which will pack and prepare it for delivery.
4. Order dispatch
Finally, the order is dispatched, according to the delivery method predefined by you and chosen by your customer (Express, Standard, Registered, etc.). The end customer can also track the delivery status of his order in real time.
5. Customer service and returns
If your customers have a question or a problem relating to delivery, the 4PL will take care of after-sales service for you. Also, if they wish to return a product, this will be handled by the 4PL.
4PL for the retail and e-commerce sector
The majority of e-commerce players turn to 4PL providers for their logistics, as they are unable to internalize this aspect, due to lack of time and resources. To adapt to new consumer habits, retailers are also turning to them to add online sales to their distribution channels.
The 4PL is therefore particularly well-suited to this sector, as it provides the strategic vision needed to manage all the different flows of demand across these different channels. It's a logistics model that adapts to the volatility of online consumers, with particularly high flows during peak periods such as sales and the end of the year, and lower flows during other periods.
When should you use 4PL logistics?
Here again, there are many possible scenarios. We have selected 6 of the most important for you to consider:
- Your company is becoming more attractive , and sales volumes are increasing. Problem: managing the storage of goods and the processing of orders is becoming complicated.
- Supervising logistics operations is by no means your core business, and you want to devote most of your time to developing new customer acquisition strategies.
- Warehousing your own inventory is becoming costly and/or time-consuming.
- Conquering new markets, reaching more consumers nationally and internationally, is one of your priorities. The network of sites provided by the 3PL enables you to do just that.
- For you, reducing delivery costs and times is a priority area for improvement.
- The return of parcels is becoming too complex to handle.
Why choose Rakuten Fulfillment Network for your 4PL logistics?
We're well aware that choosing the right service provider to outsource all or part of your logistics is no easy task. It can even be a source of stress for many entrepreneurs and business leaders.
As a major player in e-commerce for several decades, Rakuten is aware of this problem and has decided to support you with the Rakuten Fulfillment Network, a turnkey solution with no hidden costs that takes charge of your e-logistics and supports it as the market changes.
In a nutshell, Rakuten Fulfillment Network is :
- Save time and money managing your logistics;
- Reduce the time it takes to deliver your orders;
- Control your digital growth;
- An increase in acquisition channels via your own website, our e-commerce platform and all other marketplaces;
- A dedicated account manager to support you in all your endeavors.