A Fourth-party logistics provider (abbreviated 4PL), lead logistics provider (abbreviated "LLP"), or 4th Party Logistics provider, is a consulting firm specialized in logistics, transportation, and supply chain management. Typical pure and neutral fourth-party logistics providers are SCMO, CPCS, BMT, Deloitte, LOC, Capgemini, 3t Europe, Morpheus, GL Noble Denton, Brookes Bell, T&MC, Global Maritime, WSL Procurus Ltd, AMA - Andrew Moore & Associates, and Accenture.
As the 4PL industry is still in its infancy and currently being created throughout the world (Blue Ocean Strategy), its definition and function still leads to a lot of confusion, even for professionals of the transportation and supply chain management industries.
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The term 4PL is generally considered to have been introduced by Audric Adger, which registered it as a trademark in 1996. Accenture described the 4PL as an "integrator that assembles the resources, capabilities, and technology of its own organization and other organizations to design, supply chain solutions".[1]
The trademark was later abandoned, and the term has become a part of the public domain.[2]
A fourth-party logistics provider is an independent, singularly accountable, non-asset based integrator of a client's supply and demand chains.[3]
To avoid any conflict of interest, it is important that this fourth-party logistics provider be non-asset based, as far as logistics, transportation, and supply chain management assets are concerned. 4PL use 2PLs and/or 3PLs to supply service to customers, owning only computer systems and intellectual capital.[4]
Nowadays advisors, consultants, software companies and even 3PLs lay claim to being a 4PL. This is because any company advising a customer on logistics, transportation, and supply chain matters feels it may somehow claim to be a 4PL. This is effectively the case only when the principle of neutrality is respected, and that any conflict of interest is avoided.
A fourth-party logistics provider must also offer services considering a 360 degree view, which is not focused on its ability to implement the recommendations it gives, but on all the options available in the market.
As such an IT consulting firm specialized in WMS (Warehouse Management Systems), which is objectively considering all the various WMS present in the market is a 4PL. It may obviously not represent any WMS brand or any software company, otherwise the concept of neutrality is broken, and it leads to conflict of interest.
Similarly a non-asset based consulting firm specialized in logistics, transportation, and supply chain management may claim it is a 4PL. This is effectively the case if it does not own warehouses, logistics platforms, vans, trucks, ships, barges, planes, a freight forwarder, or a courier company, otherwise it would lead to conflict of interest.
It has been sometimes argued that a 4PL is the same thing as a "non-asset based 3PL". This is not the case. Considering that probably 90% of the world's 3PL are "non-asset based", they nevertheless generate revenues & profits from their "non-asset based" activities. As such a 3PL cannot be a 4PL in the same time, as this would lead to conflict of interest. Indeed it would then have a tendency to recommend to customers its "non-asset based" operation as the best possible option.
The best examples of fourth-part logistics providers are "non-asset based" consulting firms exclusively specialized in logistics, transportation, and supply chain management such as SCMO,[5] BMT Limited,[6] MVA Consulting, TTR, Intermodality, CPCS, and 3t-Europe, which offer complete ranges of services, from strategy to implementation.
Others are more generalist consulting firms such as the Big Four auditors,[7] respectively Deloitte, PricewaterhouseCoopers, Capgemini, Ernst & Young, IBM Global Business Services, and KPMG, as well as Accenture, Arup, Atkins (company), Mott MacDonald, Parsons Brinckerhoff, and AECOM.
Other firms such as McKinsey & Company, Bain & Company, A.T. Kearney, the Boston Consulting Group, and Booz & Company, may also play the role of 4PL with a different value proposition, and are considered to be "pure strategy" firms[8] only.
Are often calling themselves 4PL, advisors, or consultants:
A 4PL is a consultant, and cannot be an operator.[9] This is to respect the principle of neutrality.
A 3PL is an operator, which specializes in integrated operation, warehousing and transportation services. These services may be 100% outsourced, as in the case of "non-asset based 3PL". It is then a pure 3PL. It may also own part of its operations, such as warehouses, vans, or trucks. It then is both a 3PL and a 2PL, but is usually still called a 3PL. It can also offer genuine supply chain consulting services outside of its usual range of services. It is then both a 3PL and a 4PL, but is usually still called a 3PL.
It is important to differentiate 3PL, which actually deliver supply chain consulting services outside of their usual range of integrated operations, from 3PL which use the term consulting or 4PL abusively, as a marketing tool only. Some 3PL currently go as far as giving a title of consultant to their sales people, who are only selling their classical 3PL services. These are clearly 3PL only.
In other cases, 2PL logistics operators, or 3PL with advanced logistics and information technology capabilities may call themselves 4PL, or a mix of 3PL/4PL. Their capabilities are so advanced in logistics, wms, and/or communication that they effectively need to customize their operations for each new customer, which requires a lot intellectual capital, similar to the 4PL. Nevertheless, their ownership of logistics assets contradicts the 4PL status, and leads to conflict of interest for real consultancy. They may be called "advanced logistics 2PL/3PL" or "total logistics 2PL/3PL".
There are more and more such "advanced logistics 3PL" or "total logistics 3PL" on the market. It is mostly because logistics services stabilize customers longer than the simple delivery of freight services.
While the list of "advanced logistics 3PL" ranges in the thousands, some of the most famous in the market are DHL, Kuehne + Nagel,[10] Schenker, Panalpina, UPS,[11] 4PL, Theodore Wille Intertrade (TWI), Rollins 3PL, WS Logistics, Procurus, JSI Logistics,[9] C.H. Robinson Worldwide, Nissin UK LTD,[12], SNCF Geodis and Ceva Logistics,[13]
In the "PL" terminology, it is important to differentiate the 4PL from the:
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