Supply Chain Discussion: Why a 4PL Over a 3PL?
Eric Rempel is chief innovation officer at Redwood Logistics. They are a North American 3PL who are trying to remodel themselves, or part of themselves into a 4PL Supply Chain as a Service provider.
Here he speaks about how the capabilities of the two models overlap to some degree, a fourth-party logistics provider (4PL) has the execution capabilities of a third-party provider (3PL)
“from cradle to grave across your logistics lifecycle, but also above it you have orchestration and total visibility across your digital supply chain.” - Eric Rempel
In other words, a 4PL can manage the activities of a 3PL while also looking at the big supply-chain picture.
The orchestration of and big supply-chain picture that he speaks of is what Nucleus refers to as supply-chain optimization. He says more specifically, while the 3PL is about execution, the 4PL is about orchestration. We agree there; 3PLs are about execution, but execution using only the fixed assets and system that 3PLs are locked into using to do so.
Rempel sees that 4PL requires “elevating” the way one looks at a supply chain. It’s not just a matter of getting things done, he says.
“It means orchestrating events so that when something happens, I want something else to happen to complete the lifecycle journey of my freight, of my supply chain goods, and I want to be able to control it and modify it.” - Eric Rempel
He sees that as a big evolutionary step.
“An organization can say, I'm going to focus more on how I run my business, and I'm going to outsource some of my orchestration capabilities around my supply chain to a partner and work with them around my business strategy, which I'll focus on.”
And that's it, frankly. As a 4PL Supply Chain as a Service(SCaaS) provider our clients can focus on their business. Their core competencies. Safely in the knowledge that both the orchestration and optimization of their supply chain (our core competency) activities are in safe hands.