Home Business What Is a 3PL vs 4PL?

What Is a 3PL vs 4PL?

by M Sakhawat
E-commerce Order Fulfilment Solutions provided by iThink Logistics

If you are looking for someone who can handle your shipping and fulfillment for you, then you are probably looking at a 3rd party logistics company. At the same time, there are plenty of logistics companies from which to choose. For example, you might be curious about the differences between 3PLs and 4PLs. What do you need to know about a third-party logistics company, and how is it different from a 4th party logistics company? Which option is right for you? Take a look at a few of the differences below, and make sure you select the best option to meet your needs. 

What Is a 3PL?

A third-party logistics company, usually shortened to a 3PL, is a company that is responsible for managing all of your fulfillment needs. There are a number of tasks that a third-party logistics company may complete on your behalf. For example, they may handle your warehousing needs. That way, when someone orders something, you simply have to ship it from your warehouse with the help of the logistics company.

They may also handle your inventory management for you as well. That way, you don’t have to worry about having too much inventory, and you can make sure you have enough inventory to meet the needs of your customer.

This type of logistics company may also handle shipping and receiving on your behalf. If you need to accept orders from your suppliers, this company can handle it for you. If you need to ship something to someone else, a 3PL should be able to handle this as well. There is also a chance that your third-party logistics company will also handle reverse logistics for you, such as returns. 

What Are the Differences Between a 3PL and a 4PL?

So, what is the difference between a 3PL and a 4PL? When you work with a 3PL, you work directly with a partner who manages your fulfillment process from start to finish. For example, there are a lot of companies that enjoy working directly with a 3PL partner because they do not have to worry about managing a warehouse, tracking their inventory, or shipping orders. If you decide to go with a 4PL instead, there is an extra layer of separation. Some of the biggest differences include:

Order Fulfillment

A 3PL company can handle order fulfillment. This includes taking the items, packing the orders, managing the warehouse, and shipping the packages. A fourth party logistics company will manage the entire supply chain. This includes not only order fulfillment but also transportation and technology. A merchant can work with a 4PL to handle any issues that might arise in the supply chain.

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Supply Chain Issues

Speaking of supply chain issues, a 3PL will work directly with a merchant to optimize the fulfillment process. For example, a third-party logistics company may partner with certain merchants, deciding which fulfillment locations are best to meet the needs of the client. A 4PL company will not do this. They are too far removed from the process, and they might not handle these issues on behalf of the customer. 

Client Communication

If you decide to partner with a 4PL, you may not work with a logistics company that puts you into direct contact with people on the ground. This can lead to delays in getting your questions answered. If you have a question for the 4PL, they may have to talk to their various 3PL providers to figure out where the problem is. Therefore, it may take longer to get answers to your questions. 

Which Is Right for You?

Ultimately, there are some situations where you want to work with a 3PL. There might be other situations where you want to work with a 4PL. It is important for you to compare the benefits and drawbacks of each option before you make a decision. If you have questions about which fulfillment provider is right for you, you should reach out to an agency that can help you. It is important for you to think carefully about how your orders get fulfilled because this is going to play a major role in whether you can meet the needs of your customers and clients. 

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