Fourth-party logistics, or 4PL, is gaining popularity due to the growing demand for suppliers who can handle logistics, as well as manage their supply chain. The 4PL service providers not only procure, store, and distribute supplies, but also handle its internal processes. By acting as an integrator, the service providers optimize the supply chain costs, provides better visibility on the various supply chain processes, and boost the overall productivity of the business. Usually, category managers consider factors like industry-specific expertise, the level of technology employed, as well as supply chain integration capabilities while choosing a 4PL service provider.
The foundation of a seamless supply chain planning
The five key aspects which form the foundation of a smooth supply chain planning are:
- Latest IT infrastructure
- Better strategy for planning and execution of logistics
- Industry-specific expertise
- Enhanced integration of supply chain capabilities
- Scope for customization
Post globalization, the length and complexity of supply chains have grown manifold. Buyers prefer service providers who not only track and report on the flow of goods and services but also capture real-time data with minimal disruptions in the network. All this is possible only if the suppliers have updated their infrastructure with the latest developments in the IT industry. The advanced technology used by 4PL service providers not only makes the entire flow of the supply chain seamless but also makes it easier for suppliers to connect across global networks and provides better management of information and improved reporting & end-to-end tracking.
Every logistics activity involves huge scale of coordination between distributors, manufacturers, and suppliers as well as the backward integration of information flow from customers to suppliers. Usually, supply chain managers face problems in decoding a large amount of information to coordinate logistics across geographies. 4PL companies enhance the functioning of the entire supply chain by overseeing distribution and warehousing functions as well as identification of best transport solutions.
SpendEdge’s take on the growing popularity of 4PL services
Outsourcing of logistics services has become quite common today. Buyers are looking for simple and cost-effective solutions for their businesses. Most 4PL service providers offer comprehensive portfolios, which smoothen the functioning of the entire supply chain and reduce the overall operational costs. At present, the automotive sector in the EMEA region as well as in the Americas is witnessing a high demand for 4PL services.
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