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What is 3PL and 4PL in logistics? What are the main characteristics of 3PL and 4PL services? Which option is better for you and your business? Read and find out!

There are a debate and confusion around the meaning and difference between 3PL and 4PL companies. While these services are different, they offer different levels of logistical services, some third party logistics service providers call themselves and this causes a confusion among the clients.

When it comes to logistics, most businesses find that hiring specialized companies is the most cost-effective process. The logistics providers are experts and highly qualified in their field and they know how to get the best results. If you have already decided to use a logistics service provider, the next step is to decide whether you want to use a 3PL or 4PL company.

What is 3PL and 4PL in logistics? We will discuss the difference between these two options, their main characteristic and hopefully help you decide which option is better for you.

The difference between 3PL and 4PL is that a third party logistics company handles your shipments, orders, and packing while a 4PL company handles your supply chain. This is just a simplified version of the official definition and it is a good starting point for you to understand the main point of these services.

The third party logistics companies receive, handle, store, and deliver your products. The 3Pl companies do all of these services under your business name and not theirs. The third party logistics companies also provide warehousing, packing, inventory management, and much more, depending on the specifications and needs of your business and what both parties agreed on when signing the agreement. The most important consideration you need to keep in mind is that with a 3PL, your business is still manageable. But, if you want to have more information on What is a 3PL? When should you enlist a 3PL company in Australia? The types of Third-Party Logistics providers in Australia.

The 4PL companies offer the same things a third party logistics company offers including managing the overall supply chain, legal paperwork, managerial decisions, and etc. When you sign a contract with such a company, you are signing over a complete control of your supply chain. In other words, the 4PL will use their resources to make sure the supply chain is properly maintained and the business needs are met. You have no control over the supply chain or any daily processes. This can be both bad and good thing. The good thing is that you’ll have more time to deal with your business, your customers, and work on promoting your brand. The bad thing is that you have no control over what is happening with your orders, packaging, and shipping.

One of the most important decisions you can ask yourself before making a final choice is how much control do you want to have. This is a simplified approach to an overall complex process, however, it is a good starting point. You should be able to predict the way you and your business are moving and be able to decide what is better for your business. The 3Pl provider can take care of your orders, shipping, and delivery and leave the management to you. The 4PL company can handle everything and you will have no responsibilities related to logistics. The provides is in a full control over your logistics operations.

Like any business decision, the best thing to do right now is determine your business needs, know what factors are your top priorities, and what resources you have available. Your decision-making process will go smoother and there is less chance of making a mistake that will cause problems in the future.