The emerging global economy and the resulting increased competition are driving more manufacturing and retail companies to outsource their logistics functions. Obviously logistics has not been their core function due to the expensive assets involved like vehicles, warehouses, IT infrastructure and time, cost and efforts required to build the platforms, resources and infrastructure that in turn contributing to many risks with no advantages at all. Yet it is very critical to sustain their business. This has made viable option for any company to outsource the logistics to a 3rd party service provider and leverage on their assets and capabilities to efficiently manage these requirements by getting fixed and working capital down. Any goods that comes and goes of the company needs expensive planning, supervision, movement, customs clearance, storage etc which made companies spend most of their time into them.
3PL: The desperate need for an outside logistics provider triggered the evolution of 3PL services which is been the most dominant and arguably the largest market in the world. 3PLs offered great advantages to the companies in terms of
• Economies of scale (merits from large truck fleets, warehouses, etc.)
• Access to world class processes and technologies
• Access to the resources not available in-house
• Risk sharing
• Adaptability to business changes
With all these advantages companies had better focus on their core competencies. However competition further intensified when they had all the time to focus on better competing.
4PL: When competition intensified, globalization reached the peak and world looked so flat the services provided by 3PLs seemed just not enough. This created an opportunity for the rise of 4PLs, a non asset based service provider assists companies by integrating resources, capabilities and technology of its own and coordinate with various 3PLs (Transportation, warehousing, air freight, shipping, customs clearing etc) along with load planning, tracking, shipment consolidating, carrier performance management, billing and payments etc. 4PL provides a comprehensive supply chain solution in package that in turn helps companies manage complexity and time as well.
While companies thrive for better results in the bottom line and more value and better impact on the entire supply chain, a new concept is taking birth & it’s called 7PL!
So what is 7PL?
Its 3PL+4PL=7PL. Yes it is the combination of 3PLs with 4PL i.e. one service provider can provide a client with both 3PL and the services of 4PL. 7PL overseas the entire logistics system, where all the services are provided under one roof. This gives customers an easy way to deal with 7PL under one contract, one bill and single point of contact to manage entire logistics.
Many industry experts think this is going to be the next evolution where large players play a role of logistics services and service providers with the large offer. Top players in the market will lead the race and rest will drop out. This concept provides lots of excitement to all the manufacturers.
Though 7PL offer so much of excitement, for me it looks like a same old formulae of 3PL. When 3PLs came into the market they looked like same with a promise of providing free up from resources, all types of benefits in terms of technology, visibility, control when it come to managing logistics. But somewhere down the line the gaps created by 3PLs with in this led to the concept of an asset independent 4PL. The concept of the 4PL makes more logical being a consulting firm generally BPOs and software consulting firms have the ability to build their own platforms that suits client business, co-ordinate with various carriers and do all the back office and operations that exactly caters to the customer needs. But I really doubt whether 7PLs can ever do this?? It is a kind of hoopla created by 3PLs that they are well placed to build virtual supply chain networks and offer complete package for the clients. They had all the opportunities to do this in the past but they didn’t. I still have doubts; can 3PLs address the idea of a 4PL? Does it ever going to be the model it is proposed? I would encourage your thoughts and ideas on this!
3PL: The desperate need for an outside logistics provider triggered the evolution of 3PL services which is been the most dominant and arguably the largest market in the world. 3PLs offered great advantages to the companies in terms of
• Economies of scale (merits from large truck fleets, warehouses, etc.)
• Access to world class processes and technologies
• Access to the resources not available in-house
• Risk sharing
• Adaptability to business changes
With all these advantages companies had better focus on their core competencies. However competition further intensified when they had all the time to focus on better competing.
4PL: When competition intensified, globalization reached the peak and world looked so flat the services provided by 3PLs seemed just not enough. This created an opportunity for the rise of 4PLs, a non asset based service provider assists companies by integrating resources, capabilities and technology of its own and coordinate with various 3PLs (Transportation, warehousing, air freight, shipping, customs clearing etc) along with load planning, tracking, shipment consolidating, carrier performance management, billing and payments etc. 4PL provides a comprehensive supply chain solution in package that in turn helps companies manage complexity and time as well.
While companies thrive for better results in the bottom line and more value and better impact on the entire supply chain, a new concept is taking birth & it’s called 7PL!
So what is 7PL?
Its 3PL+4PL=7PL. Yes it is the combination of 3PLs with 4PL i.e. one service provider can provide a client with both 3PL and the services of 4PL. 7PL overseas the entire logistics system, where all the services are provided under one roof. This gives customers an easy way to deal with 7PL under one contract, one bill and single point of contact to manage entire logistics.
Many industry experts think this is going to be the next evolution where large players play a role of logistics services and service providers with the large offer. Top players in the market will lead the race and rest will drop out. This concept provides lots of excitement to all the manufacturers.
Though 7PL offer so much of excitement, for me it looks like a same old formulae of 3PL. When 3PLs came into the market they looked like same with a promise of providing free up from resources, all types of benefits in terms of technology, visibility, control when it come to managing logistics. But somewhere down the line the gaps created by 3PLs with in this led to the concept of an asset independent 4PL. The concept of the 4PL makes more logical being a consulting firm generally BPOs and software consulting firms have the ability to build their own platforms that suits client business, co-ordinate with various carriers and do all the back office and operations that exactly caters to the customer needs. But I really doubt whether 7PLs can ever do this?? It is a kind of hoopla created by 3PLs that they are well placed to build virtual supply chain networks and offer complete package for the clients. They had all the opportunities to do this in the past but they didn’t. I still have doubts; can 3PLs address the idea of a 4PL? Does it ever going to be the model it is proposed? I would encourage your thoughts and ideas on this!
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