The Differences Between 3PL & 4PL Companies

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3PL Meaning & 4PL Meaning

What Does 3PL Mean: 3PL Definition

How would you define 3PL companies? Many people have some idea of what they are, but find it hard to put it into words.

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First of all, what does 3PL stand for? It stands for 3rd party logistics. So, by a simple definition, a 3PL provider is a company outside of your own that provides you with logistics services. However, it goes a bit deeper than that depending on your needs.

What is 3PL? A 3PL logistics company can provide services a la carte as you need them, or they can manage all aspects of your shipping and logistics operations.

Many businesses prefer to work with a 3PL shipping company instead of forming their own in-house logistics center simply because it is easier and usually more cost-effective. 3PL providers are the experts on logistics. Outsourcing these services allows your teams to focus on what it is they do best. Plus, 3PL companies have the professional connections and technology needed to keep your shipments running smoothly and transparently.

Having a great logistics partner on your side can greatly enhance the customer experience and lead to higher customer satisfaction.

Additionally, 3PL services can scale and shrink as you need them. Instead of investing in the logistics equipment you will need only in your busiest season, you can work with a 3PL company whose services will scale with you through your surges and slow seasons.

What Does 4PL Mean?

4PL stands for 4th party logistics. 4PL logistics providers help with the design of a full logistics plan. Then they oversee the execution, monitor the plan for any problems or shortfalls, and continually make adjustments. They are involved in making sure every aspect of the supply chain is efficient, cost-effective, and functional.

Businesses like to work with 4PL services because they can act as a single point of contact in real time for multiple 3PL providers. Additionally, they give strategic oversight which can help you save money in the long run. 4PL companies allow you to focus on your products while they handle the complex supply chain management.

What Is 3PL Logistics Vs. 4PL Logistics?

What is the difference between 3PL and 4PL logistics? Amertrans Logistics is both a 3PL and a 4PL logistics provider. 4PL logistics management is higher level and more involved with the planning, oversight, and execution of a full logistics project.

3PL providers mainly just provide the services needed to execute the plans. 4PL companies may work with several 3PL companies to get the job done. These can include a 3PL warehousing and distribution or transportation company.

What Is a 3PL Company?

3PL companies may provide a wide variety of services including:

  • Order fulfillment
  • Customer service
  • Transportation services
  • Inventory management

3PL global services are also very helpful for businesses that need to ship goods internationally. Working with a freight forwarder or international shipping specialist will help get your goods through customs in a timely manner. Additionally, consolidating international shipments with the help of an expert at key points in the logistics process can save you money and time.

How Does 3PL Order Fulfillment Work

3PL providers can work in any area of logistics needed. Some companies specialize in different areas. Overall, they perform any and every part of order fulfillment.

Your chosen 3PL company will first receive your inventory at their warehouse. Every 3PL may have a different process for receiving. However, it usually involves filling out a form or using an online warehouse management system to keep everything trackable and documented.

Next, they will store it in their 3PL warehouse meaning they will organize your product onto a shelf or pallet. Products will be organized by SKU so they are easy to find when needed.

Finally, when a customer places an order, they will fill it. Each 3PL warehouse functions differently. For some places, you need to actually send them each order. Others use more modern technology so the process is instant.

This is the importance of a warehouse management system like the one we use here at Amertrans Logistics. It makes everything fast and easy.

Now, it is time to prepare the package for shipment. Most 3PL companies will provide basic packaging materials either as part of your package or for an extra fee. You can also provide your own branded ones.

3PL providers are definitely the experts when it comes to packaging so they know how to best protect products. It’s best to let them come up with the best and safest packing plan.

They will then print the appropriate shipping label and ship the package, usually using a final mile carrier like DHL, UPS, or even the USPS. Some warehouses work with a specific carrier, while others use the least expensive option at the moment.

They can also process returns as part of a reverse logistics initiative. So, they will help provide shipping instructions for returns, take them into the warehouse, evaluate them and then return them to stock, repair them, or send them back to you, the manufacturer.

3PL Costs

Since these services are customized towards each project, the costs can vary significantly. However, ther eare certain items that you can expect to see on the invoice:

  • Onboarding costs
  • Receiving prices
  • Storage costs
  • Picking, packing, and packing supplies costs
  • Shipping rates

The Top 3PL Services

Having great logistics services can truly transform your customer’s experience. here are some of the most popular services that 3PL companies offer that can help your business thrive:

Fast Shipping: Studies show that customers really do want quick shipping. They will abandon their carts or not purchase due to slow shipping speeds. Working with an experienced 3PL provider can offer your customers faster shipping than what you could offer on your own.

Geographic flexibility: Many national and even international 3PL companies can help you get your products into more locations. Some of these companies have warehouses in many locations throughout the US, North America, and the globe at large. This can decrease shipping times. and allow your items to be shipped from the most convenient and cost-effective location.

Analytics and Reporting: When working with both 3PL and 4PL providers, one of the most important things is reporting and analytics. This data can be used to ensure the plans are running smoothly, goals are being met, and figure out when to make adjustments to the logistics model. This data can also give you a competitive advantage in your market.

When to Consider Using a 3PL or 4PL Company

You should consider outsourcing your logistics services once:

  • You can’t keep up with your volume of sales. When packages are going out late and you’re having trouble keeping everything in order, it’s time to hire an expert partner.
  • You want to offer better service, whether that means a more streamlined returns process or faster shipping.
  • You don’t have enough space for your inventory at your current location.
  • Your current logistics system doesn’t provide you with enough data for evaluating your systems.

Ready to move forward with planning your next logistics project with a 3PL or 4PL logistics provider? Contact us to find out how we can solve your logistics challenges.

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