3PL vs 4PL Explained

Brooke Anderson from XM Developments talks about 3pl vs 4pl. He talks about how companies can utilize and leverage a 3PL provider. He also talks about the layers that can be added to a 3pl provider to become a 4pl. He uses Amazon as a great illustration when talking about the 4pl model.

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  • Comment by Roshan thakkar on 2014-01-18 08:22:59

    Please guide me about why it is required to come from 3PL to 4PL. and also provide data based on that..
    Thank you

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  • Comment by Varghese Abraham on 2013-08-20 10:33:24

    How to start a 4Pl In India

  • Comment by Gwynne Richards on 2012-02-24 21:11:22

    My understanding is that 4PL are non-asset owning buying in services from 3PLs, forwarders etc to give an end to end supply chain service using their IT expertise to manage it. Only confusion is that some 3PLs now have 4PL divisions! Somebody suggested calling them 7PLs!

  • Comment by Sandeep on 2012-02-05 15:29:24

    Hi Kim,

    Quick but informative video.

    Can you kindly comment on VMI?

  • Comment by Brooke on 2011-08-16 08:00:39

    Hi Kim,
    The Amazon B2C example I used only works because there is only one price per item when ordering online. This means the product is user-agnostic and there is no need to differentiate who is ordering, and how many they order. B2B doesn’t work like this. There are multiple pricing structures in B2B based on volume of contracted discounts e.g. buying 100 and the cost per unit will be different than buy 10,000. Another example is a company like SuperCheap Auto (or Walmart, etc) buying wiper blades from Tridon. They may only be ordering 10, but because as a group of stores they consume so many they have a low contract price in order to be exclusive suppliers.
    Amazon or any other 3PL’s can’t make allowances for B2B on a large scale unless they have a full financial engine in behind it. This is why you see some 3PL’s running multiple instances of a client’s accounting software in one site. I know one 3PL that runs 6 different ERP systems (3 of which are SAP) but they belong to the client (not the 3PL) in order to provide correct pricing – which raises the question of whether they are in fact a true 3PL, since they are merely extending clients systems. I would consider this Warehousing Management and Distribution (WMD) not 3PL, my opinion only.
    Some of our clients have up to 20 prices for one product – multiply that by the number of products (in this case 36,000) and you have a huge challenge on your hands. We know, because this is what we do!

  • Comment by Kim Martin on 2011-08-09 16:28:45

    Hi Brooke,

    Thanks for the insight, I am interested in your final comment. What are the limitations with 4PL and B2B?


    Kim Martin