Like most people in logistics and warehousing, you may have heard of the term third party logistics. This is just one type of third-party logistics system or 3PL. But what are some other types of third-party logistics? There are many different 3PLs out there so if you don’t want to use the ‘one size fits all’ kind offered by a larger agency, then you could be more specific about which 3PL system you need. To give a general idea on how they might look here is an outline for 1PL to 6PL (and beyond) and how the supply chains associated with them might integrate. The more a company moves from 1PL to 6PL (and beyond), the more their own supply chain will become managed by outsourced companies and thus integrated with those outside your company’s management to increase service levels in your supply chain as well as reduce costs.
1PL: 1st Party Logistics
What is 1PL? If a company is referred to as 1PL, it means they deliver their goods to the merchant themselves and not through an intermediary. They can either own or hire all trucks or contract this service to another party, because in any case no third parties are involved, whereby the 1PL principle may also be defined as "self-delivery ". For example: If a manufacturer produces tools and sells directly to shops then taking over with its own trucks.
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 subcontractor to move their goods. It's 'asset-based' which means that the provider owns their own fleet of transportation equipment and trucks, machinery, or containers as well as drivers often including truckers
3PL: 3rd Party Logistics
What is 3PL? 3PL stands for Third Party Logistics. The abbreviation LOGY also exists but is less popular. Both are signs used to distinguish different forms of logistics provider. A company that provides its services in the field of third-party logistics can be called both a 3PL and a LOGY provider. For example, these questions could be asked:
• Transport and freight forwarding
• Warehousing including inventory management and cross docking
• Packaging and labeling
So, manufacturers can outsource all their transport, storage, packing and distribution of their goods using a single 3PL company. 3PLs are any service provider to a manufacturer that uses processes such as those for outsourcing, but outside the four walls of the factory. Most 3PL companies are flexible so that you can select to use as many or as few of their services depending on your specific requirements.
4PL: 4th Party Logistics
What is the meaning of 4PL? The fourth Party Logistics solution includes an independent, or ‘neutral’ lead logistics provider. A 4PL company will liaise and co-ordinate one, or multiple 3PL provider companies in order to provide the optimal service for its customers. Therefore, a 4PL provider is essentially equivalent to a 3PL but with some new added benefits:
• Project Management, sourcing and negotiation
• Logistics strategy and analytics
• Impartial service advice
• A single point of contact
In 1996 as registered 4PL as a trademark, which was defined as: “A supply chain integrator that assembles and manages the resources, capabilities, and technology of its own organization with those of complementary service providers to deliver a comprehensive supply chain solution.”
5PL: 5th Party Logistics
What is 5PL? 5PL stands for five crucial elements to a business' logistics-related interactions. These include expedited service, last mile delivery, parcel consolidation, predictive and data analytics, and supply chain visibility based on the use of technology. These are necessary in order to integrate distribution hubs around the globe as well as manage a corporation's key metrics in regard to forecasted demand, managing forecasting errors and other factors that can have an impact their distribution costs. While 5PL is usually created with e-commerce in mind due to its focus on the technology sector it can also be used with brick-and-mortar operations or any others that fit into the context of a corporation's technological style.
6PL: 6th Party Logistics
What is 6PL? Still somewhat theoretical, 6PL is a fully integrated and partly automated supply chain solution monitored by artificial intelligence (AI). Despite the still semi-distant nature of the concept of AI in the supply chain, it’s already been speculated that this type of AI driven supply chain management would result in huge technological advancements. For example: incorporating an AI could help monitor the whole supply chain using trends, ordering patterns and forecasting models and trigger goods production as soon as necessary, send instructions to deliver stock or highlight anomalies.
Resources : AK Logistics and Supply Chain & shiprocket
Like most people in logistics and warehousing, you may have heard of the term third party logistics. This is just one type of third-party logistics system or 3PL. But what are some other types of third-party logistics? There are many different 3PLs out there so if you don’t want to use the ‘one size fits all’ kind offered by a larger agency, then you could be more specific about which 3PL system you need. To give a general idea on how they might look here is an outline for 1PL to 6PL (and beyond) and how the supply chains associated with them might integrate. The more a company moves from 1PL to 6PL (and beyond), the more their own supply chain will become managed by outsourced companies and thus integrated with those outside your company’s management to increase service levels in your supply chain as well as reduce costs.
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